The Tokai Bank, Limited

Transcription

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STRATEGIC INITIATIVES FOR THE NEW MILLENNIUM
ANNUAL REPORT
1
A P R I L
1 9 9 8
9
9
-
9
M A R C H
1 9 9 9
Contents
Financial Highlights.................................................................................... 1
A Message from the Management.............................................................. 2
Strategic Initiatives for the New Millennium ............................................ 6
Improved Earnings Structure ................................................................. 6
Disposal of Problem Loans..................................................................... 11
Rebuilding Capital Structure.................................................................. 16
Improved Efficiency................................................................................ 19
Strategic Alliance with Asahi Bank......................................................... 22
Company System & Non-Board Member Executive
Director System .................................................................................. 25
Year 2000 Readiness Disclosure ............................................................. 28
Topics....................................................................................................... 31
Risk Management.................................................................................... 36
Compliance System................................................................................. 50
Financial Section ........................................................................................ 51
Six-Year Financial Summary ..................................................................... 52
Financial Review ........................................................................................ 53
Consolidated Financial Statements ........................................................... 58
Additional Non-Consolidated Financial Information ............................. 78
Top Management .......................................................................................103
Organization Chart ....................................................................................104
International Directory...............................................................................106
Overseas Network .......................................................................................108
Corporate Data ...........................................................................................113
Note: The English translations in this annual
report of the names of and terms relating to
the various laws promulgated by the
Financial Reconstruction Commission (FRC)
employ the provisional translations used by
the FRC.
Financial Highlights
For the years ended March 31, 1999 and 1998
Selected Data for The Tokai Bank, Limited and Consolidated Subsidiaries
Yen
In millions, except per share data
1999
For the Fiscal Year
(Loss) Income before Income Taxes
and Minority Interest
Net (Loss) Income
¥
At Fiscal Year-end
Total Assets
Securities
Loans and Bills Discounted
Deposits
Stockholders’ Equity
Per Share Data
Net (Loss) Income
U.S. Dollars
1999
1998
(368,620)
(286,763)
¥
16,330
14,257
$ (3,058)
(2,379)
¥31,839,710
4,574,963
18,869,157
20,842,935
1,564,430
¥34,920,728
4,279,644
20,504,164
22,051,406
1,065,787
$264,120
37,951
156,526
172,899
12,977
¥
¥
$ (1.186)
3.185
(143.01)
383.96
Cash Dividends
5.33
475.98
7.00
8.50
0.058
Dollar amounts represent translation of yen at the rate of ¥120.55 to US$1 prevailing on March 31, 1999.
● Yen and U.S. dollar amounts are rounded to the nearest whole number or decimal.
●
Net Income (Loss)
Total Assets
(¥ Billions)
(¥ Trillions)
(¥ Billions)
20
1,564
1,600
40
16.8
35.4
14.3
32.5
10
34.9
33.1
31.8
1,200
30
1,113
4.6
1,061
1,066
97
98
959
0
20
800
-10
10
400
5
(134.6)
95
96
97
98
(286.8)
99
0
95
96
97
98
99
0
95
96
99
1 The Tokai Bank, Limited
A Message from the Management
Japan’s financial industry is facing a watershed in the form of unprecedented largescale bankruptcies and ongoing speedy globalization. In October 1998, a framework
for stabilizing Japan’s financial system was established based on the Financial
Reconstruction Law and the Financial Function Early Strengthening Law, which has
since provided a measure of market calm.
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Yet restoring trust in Japan’s financial system
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Management Plan (extending to the fiscal year ending
remains a pressing task. Banks must first revitalize
March 2003), and the steady implementation of its
management by quickly restoring asset quality and
initiatives is a management priority.
then tackle the tasks of reconstructing business to
remain in step with changing markets, thoroughly
streamlining management, and raising efficiency.
Tokai Bank began its 11th Long-Term Management
Fiscal Year Ended March 1999 in Review
Net business profit, excluding addition to the
general reserve, decreased by ¥15.8 billion year-on-
Plan in April 1998 for the three years ending March
year to ¥175.8 billion on a non-consolidated basis.
2001 to create a dynamic management structure by
Although bond-related profits declined by ¥32.9
focusing its resources on businesses in which the Bank
billion, positive factors included an increase in
can excel, reducing operating costs and creating a
interest income and a decrease in operating expenses.
powerful earnings structure. In March 1999 we set the
Tokai Bank implemented thorough initiatives in
“Plan to Revitalize Management” as part of our
areas such as expediting the final disposal of problem
application for public funds. This five-year plan
loans and taking preventive measures by setting aside
complements the “new” 11th Long-Term
reserves to cover the possibility of further asset
¥185.7 billion.
However, as a result of our aggressive disposal of
problem loans, the amount and ratio of problem
loans under the new disclosure standards have
declined sharply. At the same time, our coverage ratio
has reached a sizable level. We therefore believe the
worst is behind us and we are positioned to make a
fresh start.
Capital Injection of Public Funds
With the aim of bolstering the capital ratio, which
had declined as a result of the aggressive problem loan
disposal in the fiscal year ended March 1999, and to
ensure a sound financial base that will allow us to
Hideo Ogasawara, President
extend credit smoothly, so that we may continue to
meet our social responsibility as a financial
deterioration given Japan’s prolonged economic
institution, Tokai Bank applied for a capital injection
recession. These efforts were conducted in full
of public funds amounting to ¥600 billion in March
compliance with “The Viewpoint on the Write-Offs
1999. Upon passing the FRC’s rigorous scrutiny, the
and Allowances in Association with the Capital
Bank received these public funds through the issue of
Injection” issued by the Financial Reconstruction
convertible bond type preference shares. At the same
Commission (FRC) and the Financial Supervisory
time, we also raised ¥122.0 billion in common stock
Agency’s Financial Inspection Manuals. As a result,
through the allocation of these new shares to third
credit-related charges totaled ¥577.6 billion,
parties. As a result of these measures, we have
significantly exceeding the level in the previous fiscal
achieved a capital ratio exceeding 12 percent.
year, and loss before income taxes totaled ¥313.8
Looking forward, Tokai Bank will make every effort
billion. The Bank therefore reported a net loss of
to contribute to the stability of the financial system by
bolstering loans to medium- and small-sized
margin transactions overseas and with large corporate
companies and to individuals. At the same time, in
customers. By the end of the fiscal year ending March
steadily implementing the strategies of our Plan to
2003, we plan to increase lendings to medium- and
Revitalize Management, we will work to boost our
small-sized companies by ¥1.3 trillion and loans to
earning capability and to steadily redeem the public
individuals by ¥1.0 trillion, but to reduce lendings to
funds received.
large-sized companies by ¥700 billion. We also plan to
sell ¥500 billion in cross-shareholdings and to reduce
Strategies for the Future
The Plan to Revitalize Management we
implemented when we applied for public funds will
overseas assets by ¥1.0 trillion primarily by restraining
transactions with non-Japanese-affiliated customers.
In addition, by the fiscal year ending March 2003,
end only when the public funds are fully repaid. Our
we plan to bolster earnings by significantly improving
objectives under this plan, which we are totally
the spread on domestic lending, excluding loans to
committed to achieving, are net business profit of
individuals and public entities.
¥230 billion, a Tier 1 ratio of at least 8 percent, a
capital ratio of at least 12 percent, and a consolidated
ROE of at least 10 percent. We will devote the next
Greater Efficiency
Tokai Bank is now moving ahead in restructuring
four years to completely reconstructing our business,
and streamlining its marketing and support
drastically revamping our efficiency and reforming
framework, executing a thorough program of raising
our asset composition over and above what we have
personnel and branch efficiency. As a result, we expect
done in the past, thereby building a stable earnings
a ¥26.4 billion decrease in operating expenses by the
structure.
fiscal year ending March 2003.
To effectively execute these strategies, in May 1999
Reform of Asset Composition and Improved
we refined our “company system” with a focus on
Earnings Structure
domestic business divisions. We are implementing
We are focusing management resources on our core
measures that incorporate our regional strengths, and
customer segments of medium- and small-sized
have created a system conducive to expanding our
companies and individuals, while scaling back low-
earnings.
Strategic Alliance With Asahi Bank
Tokai Bank and Asahi Bank share a common
Looking Forward
Amid the turbulence within the financial industry,
business strategy of concentrating management
banks must reaffirm their origin. That is to say, they
resources on medium- and small-sized companies
are financial institutions that extend credit based on
and individuals. Our strategic alliance has the goal of
the ability to determine the creditworthiness of
raising cost competitiveness and strengthening
potential borrowers. Step by step, we must
management capabilities beyond the levels each bank
successfully execute our Plan to Revitalize
could achieve alone. Looking forward, we will create a
Management and fully repay the public funds received
financial holding company with overwhelming
through the earnings generated, thereby restoring the
predominance in serving middle-market and retail
confidence of shareholders, depositors and the public
customers. We aim to configure this financial holding
at large.
company in the form of what we term a “Multi-
I personally pledge that Tokai Bank will successfully
Regional Bank,” with participation open to other
realize its Plan to Revitalize Management. All of us at
regional banks and other types of financial
Tokai Bank are committed to this end, and
institutions. This alliance will proceed in two stages.
respectfully seek the continuing support of our
In the first stage, we are setting forth policies to
customers and shareholders.
enhance convenience for our customers and raise
efficiency. After each bank has completed the disposal
of its respective problem loans, the second stage will
take place between the fiscal years ending March 2002
and March 2003, creating a financial holding
company. In the second stage, we will work toward a
Hideo Ogasawara
significant increase in efficiency, with the goal of
President
reducing costs by ¥25 billion.
June 1999
Improved Earnings Structure
Core components of Tokai Bank’s Plan to Revitalize Management are improving our ability
to generate earnings and raising operational efficiency. Fundamental strategies for doing so
are the reform of our asset composition and the building up of a new marketing and
support framework.
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calculated using domestic net
investment in business and
interest income on deposits and
product development on the core
loans is not on a par with that of
businesses in which we can meet
Japan’s Big Bang have resulted in
other city banks. We are therefore
their needs competitively,
rapid deregulation that has
continuing to raise efficiency and
effectively and profitably. Thus will
increased both the diversity of
reduce operating expenses through
we achieve higher customer
customer needs and banks’ ability
streamlining. In sum, by focusing
satisfaction and create a strong,
to meet them with a wider variety
our resources on strategic markets
stable earnings structure.
of products and higher level of
and raising our operating
Equipped with a clear customer
service. These trends have created
efficiency, Tokai Bank will build a
focus as outlined below, Tokai
opportunities to generate increased
stable earnings stream, and
Bank will be able to raise asset
earnings, but also have increased
through the reform of our asset
efficiency and strengthen its
competition and pressured
composition come out as a winner,
earnings capabilities.
segment profitability as new non-
capitalizing on the opportunities
financial participants have joined
presented by the Big Bang.
REFORM OF ASSET
COMPOSITION
The globalization of finance and
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domestic and overseas financial
institutions in the financial services
marketplace.
In this environment, Tokai Bank
CORE CUSTOMERS
Term Management Plan, which
began in April 1998, we examined
back marginal businesses so that
our customer base comprehensive-
we can focus management
ly to determine areas in which we
resources on areas in which we
excelled and in which we had the
command a competitive
greatest potential to win and retain
advantage. This is supporting our
business. We then adopted the
drive to further raise customer
policy of focusing management
satisfaction and create a strong,
resources on these areas, so that we
stable earnings structure.
may become even more
predominant business base in the
Chubu region, our return on assets
Individual customers
Medium- and small-sized companies
(including large-sized companies with net assets of
¥50 billion or less)
In formulating the 11th Long-
is reviewing operations to scale
Moreover, despite our
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competitive in them.
Having thus defined our core
customers, we will concentrate
REFORM OF ASSET
COMPOSITION UNDER
THE PLAN TO
REVITALIZE
MANAGEMENT
The 11th Long-Term
Management Plan, covering the
three years ending March 2001,
includes a focus on asset expansion
in core customer groups through
the expansion of loans to
medium- and small-sized
companies and individuals. On the
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other hand, we will reduce
transactions overseas and with
large-sized companies. This will
result in a significant shift in our
asset composition.
With the capital injection of
Goals of the Plan to Revitalize Management
(compared with the fiscal year ended March 31, 1998)
Lending to medium- and smallsized companies
+¥1.3 trillion
public funds, we have extended the
Loans to individuals
+¥1 trillion
11th Long-Term Management Plan
Cross-shareholdings
-¥500 billion
1998 to March 2003, concurrently
Lending to large-sized
companies
-¥700 billion
implementing the Plan to
Overseas transactions
-¥1 trillion
by two years, to run from April
Revitalize Management for
additional strategic focus. This
plan places sharper emphasis on
our focus on reducing lowermargin transactions overseas and
Earnings Gains Through Reform of Asset Composition
(compared with the fiscal year ended March 31, 1998)
with large-sized companies while
Lending to medium- and small-sized
companies
increasing lending to medium- and
+¥8 billion
Lending to large-sized companies
-¥3 billion
-¥2 billion
small-sized companies and
individuals. As such, it makes an
important contribution to our
efforts to reform our asset
Total
+¥10 billion
+¥13 billion
composition and improve our
earnings structure.
In addition, we plan to increase
gross business profit by ¥13.0
billion as a result of the drive to
reform our asset composition.
As of March 31, 1999, we had
made the following progress
Progress in Achieving These Targets
(as of March 31, 1999)
Lending to medium- and small-sized
companies (including large-sized
companies with net assets of ¥50 billion
or under)
+¥150 billion (11.5%)
+¥150 billion (15.0%)
Cross-shareholdings
-¥80 billion (16.0%)
Lending to large-sized companies
-¥60 billion (8.5%)
toward our goals, as summarized
in the charts to the right.
Weak economic conditions and
corporate performance in Japan
-¥630 billion (63.0%)
(Percentages represent progress toward total planned amounts)
have restrained demand for capital
among medium- and small-sized
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companies, so we have increased
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require the following moves to
Reduction in overseas
lending to this customer group,
transactions, with a focus on
build up a new marketing and
including large-sized companies
transactions with non-Japanese-
support framework that facilitates
with net assets of ¥50 billion or
affiliated customers, has proceeded
increased business with medium-
under, by only ¥150 billion. Loans
steadily, supported by
and small-sized companies and
to individuals, however, have
consolidation of our overseas
individuals. In other words,
increased by ¥150 billion, a record-
network of operating bases
strengthening our ability to
high increase for a single year.
implemented ahead of schedule.
develop business with core
Sales of cross-shareholdings
customers is essential to meeting
Our effort to improve earnings is
generally proceeding as planned.
the objectives of the Plan to
Lending to large-sized
Given the ongoing shift among
Revitalize Management.
companies decreased by ¥60
large-sized companies toward
billion. We plan to accelerate these
financing through the capital
reductions based on the policy
markets, we must continue to
decisions made for each
build a strong, stable earnings
relationship over and above
structure based on increasing loan
targets.
assets from transactions with core
totaled ¥80 billion.
A NEW MARKETING &
SUPPORT FRAMEWORK
This initiative has two core
components. The first is focusing
on core customer segments and
delivering products and services
customers. This in turn will
Domestic Branch Structure
Network
Centers
Regional
Main Branches
Area Core
Branches
Focus on large
companies;
integrating each
branch under its
umbrella and
expanding market
share in their areas
Focus on middlemarket customers
and corporate
customers within
their areas
General Branch
Offices
Core
Branches
Focus on large
companies and
administration
Specialized Branches
(Retail Specialty Boutiques)
S Shops
SS Shops
F Shops
L Shops
Full service
branches focusing
on deposit and
loan transactions
with individuals
Mini-branches
concentrating on
areas such as retail
ATM transactions
Individual
customers can
handle all retail
transactions at any
F Shop, regardless
of the branch
where the
customer’s
account was
opened. Offer a
full line of retail
services, from
loans to asset
management.
Various services,
such as loan
consultation,
available outside
normal banking
hours.
Located in model
home display
areas, L Shops will
specialize in
housing-related
finance. Open
during normal
banking hours and
other times such as
during model
home display area
operating hours.
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that meet specific needs in each of
main urban areas of Japan,
Specialized branches will embrace
those segments. The second is
forming the cornerstones of a
the shop concept and develop
reducing personnel, lowering our
network that can respond to the
tightly focused market segments,
cost structure and raising
particular needs of each area. We
with four types according to
efficiency. To achieve these goals
have created three types of these
function: S Shops, SS Shops, F
simultaneously, we are taking
regional main branches: a regional
Shops and L Shops. Reduced
initiatives to completely revamp
main branch in the Chubu region,
staffing at these branches is
our marketing framework, and to
area core branches in the city
contributing to heightened
build up a totally new branch
centers of Nagoya, Osaka, Tokyo
efficiency.
network and structure for
and so on, and a core branch each
customer liaison and back-office
in the cities of Tokyo, Osaka,
the branch network, headquarters
administration.
Nagoya and Kyoto.
is providing support to branches to
At present, 22 domestic branches
Reorganization of Domestic
are serving as network centers in
Operating System
the new “hub-and-spoke” system.
As part of the restructuring of
further raise business development
efficiency and productivity.
Retail loan centers exemplify the
Functioning as mini headquarters
improved customer access and
Management Plan, we have begun
in their respective regions, these
efficiency of our new branch
reorganizing our domestic branch
branches have specialists in areas
organization. Directly accessible to
network into a “hub-and-spoke”
such as business promotion,
customers, these centers handle the
system. This effort entails revising
derivatives, M&A and capital
entire loan process for medium-
our prior approach of having each
market finance, and assign them to
and small-sized companies and
branch offer a complete line-up of
other branches within the network
individuals, providing loan advice
products and services in favor of a
according to customer needs. As a
and accepting loan applications,
system with three types of
result, our branch network has
then undertaking credit inspection
branches: network centers (at the
raised its flexibility, level of service,
and post-loan account
hub of the regional branch
and precision in meeting customer
management. The direct access has
network), traditional general
needs, and is making good
enhanced customer convenience,
branches, and specialized
progress in expanding our
and our introduction of an auto-
branches. These types of branches
presence in the target middle
scoring system for credit
will be linked so that they can
market.
investigation has increased our
Under the 11th Long-Term
Specialized branches, together
responsiveness while lowering
services customers require while
with general branches, serve as the
costs. We now have 24 tightly
contributing to a more efficient
spokes of the network, with a
focused loan centers in operation
branch network.
particular focus on serving
directly serving such segments as
individual retail customers.
housing loan customers, thereby
better offer the products and
Network centers anchor the
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increasing the speed and efficiency
centralized locations to create a
with which we serve market needs.
“backless” system in which
In addition, in May 1999 we
branches are relieved of back-office
established the Business Support
operations. As a result, branches
Unit, comprising each division
are better able to focus their time
organized at the head office, to
and resources on meeting
support each branch in specialist
customer needs, and we have been
functions such as private banking.
able to reduce administrative
Tokai Bank is aggressively
developing low-cost, efficient
operations that complement
personnel through consolidation
and efficiency gains.
Futhermore, we plan to
branch operations. At the same
consolidate regional operations
time, we are laying down a
centers to create a concentrated,
structure to support our drive to
highly focused operating system,
improve ATM capabilities in each
which should result in significant
region and to expand new direct
efficiency gains. Moreover, we have
access delivery channels, so as to
begun outsourcing administrative
provide customers with greater
functions such as evaluation and
convenience and services that
administration of real estate
better meet their needs.
collateral, loan administration, and
the international operations center,
Improved Domestic Operating
and this has allowed us to increase
Structure
both efficiency and specialization.
While promoting the
reorganization of the domestic
marketing and support framework,
we are at the same time reforming
and improving our administration
structure such as the domestic
branches and centralized
administrative divisions. As a
result, we will achieve greater
efficiency and lower costs.
Specifically, we have concentrated
branch administrative functions at
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Disposal of Problem Loans
Tokai Bank had dealt with problem loans adequately whenever the need arose, but in the
fiscal year ended March 1999, the Bank deployed ¥577.6 billion in the resolution of this
issue, leading to a significant loss for the fiscal year. The Bank took this extremely prudent
approach as a safeguard against the unprecedented and prolonged recessionary conditions
in Japan. The disposal of problem loans undertaken in the fiscal year ended March 1999
raised the reserve ratio for loans under risk monitor to 83.5 percent, before partial direct
charge-offs, at the end of March 1999. Considering the portion of problem loans that is
collateralized, Tokai Bank has essentially completed the disposal of problem loans and
management expects net business profit to be sufficient to handle any additional problem
loans that may emerge.
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CONDITIONS OF
PROBLEM LOAN
DISPOSAL IN FISCAL
YEAR ENDED MARCH
1999
Table 1 shows credit related
charges in connection with the
disposal of problem loans in the
fiscal year ended March 1999.
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continued weakness in the
problem loans and removing them
domestic economy and to prepare
from the Bank’s balance sheet.
for the worst-case scenario
assuming the emergence of new
problem loans, as well as to guard
against any further deterioration in
POLICY FOR CHARGEOFFS AND ADDITIONS
TO RESERVES
Autonomy and aggressiveness
credit risk overseas, particularly in
are the cornerstones of Tokai
Asia. This move was also aimed at
Bank’s policy for charge-offs and
speeding the final resolution of
Addition to the
general reserve
totaling ¥12.7
billion included in
(Yen in billions)
Table 1: Credit Related Charges
(Disposal of Problem Loans)
credit charges
under net
business profit
was made from a
preventive
standpoint. The
Bank also
deployed an
additional ¥564.9
billion to respond
proactively to
Credit charges under net business profit
Addition to general reserve
Credit charges under non-recurring profit/loss
Charge-off (including specific provision)
Loss from sales of loans
Loss from sales of loans to CCPC
Loss from sales of loans reserved
Loss from sales of overseas loans
Waiver of claims
Addition to reserves for possible losses on loan sales
Specific reserve for overseas loan losses
Credit charge under extraordinary profit/loss
Loss from devaluation of investment in subsidiary
Total
Fiscal year
ended March 31, 1999
12.7
12.7
564.9
307.4
59.8
27.1
32.7
0.0
179.4
10.1
8.1
—
—
577.6
Change from
fiscal year ended
March 1998
-31.6%
-31.6%
51.5%
-1.0%
211.4%
197.5%
926.4%
-99.8%
345.5%
27.0%
—
-100.0%
-100.0%
40.0%
Fiscal year ended
March 31, 1998
18.5
18.5
372.8
310.8
19.2
9.1
3.2
6.9
40.3
7.9
(5.4)
21.1
21.1
412.4
Note: CCPC stands for Cooperative Credit Purchasing Company, Limited.
●
additions to reserves. Complying
with the guidelines, “Practical
guidance for evaluation of internal
control over self valuation of
●
●
guarantee is deducted from the
CONDITIONS OF
PROBLEM LOANS AS OF
MARCH 1999
total loan amount, and reserves are
set aside for the remainder (in
Tokai Bank revised its
other words, the “Classification
assets, and audits of write-offs of
accounting standards as from the
IV” portion). Then, partial direct
bad loans and allowance for
fiscal year ended March 1999, and
charge-off is effected in an amount
doubtful loans of banks and
now employs partial direct charge-
equal to such reserve, so that both
similar financial institutions,”
offs in accordance with the
the loan balance and the
issued by the Japan Institute of
generally accepted accounting
corresponding reserve balance will
Certified Public Accountants, and
standards for the banking industry.
be reduced. Loans under risk
in accordance with the standards
Specifically, the Bank conducts
monitor at the end of March 1999
for charge-off and reserve policies
partial direct charge-offs using the
decreased by ¥301.2 billion after
set forth in the Financial
collateral or guarantee available for
partial direct charge-offs as
Inspection Manuals issued by the
accounts in formal or de facto
compared to what they would have
Financial Supervisory Agency
bankruptcy: Collateral or amount
been using the previous method.
(FSA), we book reserves for
deemed recoverable under the
expected credit losses as follows:
The projected loss ratio is first
Table 2: Loans Under Risk Monitor (Before Partial Direct Charge-Offs)
calculated for each of the borrower
(Yen in billions)
As of March 31, 1999
before partial direct charge-offs
categories, loan classification
categories, conditions of coverage
by collateral and guarantees, taking
into consideration reserves and
charge-offs previously made and
the average remaining life of loans.
Annual
Change
Loans under risk monitor
Ratio of loans under risk monitor
Reserves for possible loan losses
Reserve ratio
specific policies for adding to
reserves for asset inspection
categories as per the New
Disclosure Standards.
-444.4
-2.0%
-146.2
+18.4%
-36.4%
—
-18.4%
—
(Yen in billions)
As of March 31,
1999 after partial
direct charge-offs
calculated by multiplying the loan
projected loss ratio. Table 7 shows
Annual
Change (%)
Table 3: Loans Under Risk Monitor (After Partial Direct Charge-Offs)
Then, expected credit losses are
amounts for each category by the
777.2
4.0%
649.5
83.5%
Loans to borrowers in legal bankruptcy
Overdue loans
Loans overdue for at least 3 months
Loans with concessions in terms
Total loans under risk monitor
Loans & bills discounted
Ratio to total loans & bills discounted
Reserve ratio
Reserve for possible loan losses
General reserve
Specific loan loss provision
Specific reserve for overseas loan losses
As of
March 31, 1998
72.6
248.4
63.9
91.2
476.0
18,676.8
2.5%
55.4%
264.1
92.1
163.9
8.2
1,221.6
6.0%
795.7
65.1%
●
●
●
a consolidated basis as required
Reconstruction of the Function of
monitor. As of the end of March
under Article 21 of the revised
the Financial System—the so-
1999, loans under risk monitor
Banking Law (in effect on
called New Disclosure Standards.
after partial direct charge-offs
December 1, 1998), Tokai Bank is
As per the New Disclosure
totaled ¥476.0 billion, accounting
now reporting exposure to Asia
Standards, Tokai Bank divides
for 2.5 percent of loans
and emerging economies as part of
loans according to four borrower
outstanding, with a reserve ratio of
disclosure of loans under risk
categories based on self-
55.4 percent. While loans under
monitor. As of the end of March
assessment: bankrupt and quasi-
risk monitor before application of
1999, overall loans in Asia under
bankrupt claims, doubtful claims,
the partial direct charge-off
risk monitor totaled ¥29.0 billion,
substandard claims, and normal
method totaled ¥777.2 billion,
with a reserve ratio of 84.4 percent.
claims. Whereas the problem loan
Table 3 shows loans under risk
disclosure for loans under risk
Besides the loans under risk
decreasing from the previous year
by ¥444.4 billion, or 36.4 percent,
monitor, Tokai Bank now discloses
monitor is based on individual
the reserve ratio improved by 18.4
the results of asset quality reviews
loans, the disclosure under the
percentage points to 83.5 percent.
based on the Law concerning
New Disclosure Standards differs
In addition to the disclosure on
Emergency Measures for the
in that it is the Bank’s assessment
Table 4: Exposure to Asia and Emerging Economies (Before Partial Direct Charge-Offs)
(Yen in billions)
Indonesia
Thailand
Malaysia
Korea
China
Taiwan
Asia
Latin America
Africa
Eastern Europe
Russia
Emerging mkts. (excl. Asia)
Total
55.4
99.0
61.3
38.6
56.9
57.4
636.3
25.9
5.9
12.6
0.0
44.3
680.6
Annual
change
Japanese
(19.6)
(81.0)
(22.5)
(16.1)
(16.2)
(14.1)
(209.1)
(5.8)
(5.9)
(5.4)
(0.0)
(17.1)
(226.2)
16.8
45.2
2.2
0.3
17.1
14.7
206.1
3.6
0.0
4.8
0.0
8.3
214.4
Non-Japanese
Corporate
38.6
53.8
59.1
38.4
39.8
42.7
430.2
22.3
5.9
7.8
0.0
36.0
466.2
13.6
24.9
25.8
14.2
17.1
20.8
213.4
6.2
1.2
3.0
0.0
10.4
223.8
Loans
under
risk
monitor
11.6
7.9
1.3
0.3
3.6
0.0
29.0
0.0
0.0
0.0
0.0
0.0
29.0
Problem
loan ratio
20.9%
8.0%
2.1%
0.8%
6.3%
0.0%
4.6%
0.0%
0.0%
0.0%
—%
0.0%
4.3%
As of
March 31,
1998
75.0
179.9
83.8
54.7
73.1
71.5
845.4
31.6
11.8
18.0
0.0
61.4
906.8
Credit amounts by country on a final risk basis.
Table 5: Reserve Ratio for Loans to Asia (as of March 31, 1999)
Amount under risk monitor
29.0
(Yen in billions)
Reserve
Specific reserve for overseas
loan losses
Reserve ratio
24.5
8.2
84.4%
Loans under risk monitor (after partial direct charge-offs): ¥26.1 billion
The New Disclosure Standards (before partial direct charge-offs): ¥32.0 billion
The New Disclosure Standards (after partial direct charge-offs): ¥29.2 billion
●
●
●
Table 6: Claims Assessment Categories
Bankrupt and quasi-bankrupt claims
Borrower is subject to bankruptcy, corporate reorganization or composition, or borrower
has debts corresponding to these conditions
Doubtful claims
Borrower is a going concern, and its financial affairs or results are deteriorating with a
strong probability that principal and interest payments will be suspended
Substandard claims
Claims more than 3 months in arrears or loans with concessions in terms that do not fall
under the above categories
Table 7: Assets as per the New Disclosure Standards
After partial direct charge-offs
Bankrupt & quasi-bankrupt claims
Doubtful claims
Substandard claims
Subtotal (1+2+3)
Normal
Total
(Yen in billions)
Assessed
amount
Ratio to
total lending
215.5
426.8
111.0
753.2
19,964.8
20,718.1
1.0%
2.1%
0.5%
3.6%
96.4%
100.0%
Coverage
Coverage
ratio
215.5
368.4
54.4
638.3
—
—
100.0%
86.3%
49.0%
84.7%
—
—
100% coverage through collateral, guarantees and reserves
Excluding portion covered by collateral and guarantees, we set
aside reserves for about 70%.
Excluding portion covered by collateral and guarantees, we set
aside reserves for about 15%.
Regarding “loans to borrowers under watch” within “normal loans,”
we set aside reserves for about 3.5% based on the percentage of actual
credit losses as calculated using the average loan maturity.
of its assets (total claims). Table 6
ratings that serve as the premise for
above explains the assessment
credit self-assessment and the self-
categories, and Table 7 shows
assessment process itself and in
ACTION FOR FINAL
DISPOSAL OF PROBLEM
LOANS
amounts and coverage ratios
addition checks the charge-offs
Even if reserves and charge-offs
determined by self-assessment
based on the self-assessment. To
are fully made on an accounting
based on the New Disclosure
bolster the review system, Tokai
level, the disposal of problem loans
Standards: the percentage of
Bank increased the number of
can be truly completed only when
problem claims to total credit
specialist inspection officers in
they have been removed from the
extended is low at 3.6 percent, and
December 1998, and, during the
balance sheet. We are therefore
the coverage ratio is at an adequate
reorganization that took place in
moving ahead toward such final
level of 84.7 percent.
May 1999, strengthened the system
disposal through efforts including
by instituting the Credit Review
actively recovering problem loans
plans and manages self-assessments
Division, which is now
and moving them off the balance
of assets, which are carried out
independent of the Credit Planning
sheet. In the fiscal year ended
twice during a fiscal year, for each
Division, where it was attached
March 1999, in addition to the
term end (with base dates set at the
formerly as the Credit Review
actual recovery of some problem
end of June and December).
Department.
loans, we conducted bulk sales of
The Credit Review Division
The Credit Review Division
¥290.4 billion, and sold ¥58.9
independently verifies the credit
billion in problem loans to the
●
Cooperative Credit Purchasing
●
of waiver of claims, direct charge-
POLICIES FOR
PREVENTING PROBLEM
LOAN OCCURRENCE
offs and so on, the cumulative total
In order to prevent the future
Company, Ltd. With the addition
of problem loans removed from
occurrence of problem loans as
the balance sheet as of March 31,
much as possible, Tokai Bank has
1999 was ¥1.2 trillion, and we will
tightened risk management for
continue to be aggressive in
individual credits, returning to the
improving our balance sheet
basic lending principles and
through such problem loan shifts.
utilizing the lessons learned from
To ensure that the Bank
the misjudgments of the asset
continues to make progress toward
bubble era. At the same time, the
the final disposal of problem loans,
Bank is rigorously implementing
we concentrated responsibility for
internal procedures and credit
the resolution of such loans at
monitor and controls based on its
seven Credit Management Centers,
credit rating system.
thus strengthening our system of
●
In an effort to improve the
managing and recovering problem
lending capabilities of Bank
loans. These Centers are currently
personnel, we now provide
staffed by about 100 employees
training programs by class and
dedicated solely to recovering
industry to cover different levels of
nonperforming loan assets and
employee experience, in addition
thereby shortening the time
to training programs designed
required for final disposal.
according to the class and industry
of customers.
Rebuilding Capital Structure
Banks operating internationally are obliged to ensure sound financial management by
maintaining the Bank for International Settlements (BIS) capital ratio requirement of 8.0
percent, and the introduction of Prompt Corrective Action from April 1999 clarified the
steps to be taken for failing to meet it. Tokai Bank serves its core Japanese corporate
customers expanding internationally, and international operations are critical to serve
such clients’ needs and central to our effort to incorporate high-level financial technologies
in products that respond to diversifying customer needs. The continued ability to operate
internationally is therefore crucial. One objective of our Plan to Revitalize Management is
to secure a capital ratio exceeding 12.0 percent and a Tier I capital ratio exceeding 8.0
percent by the fiscal year ending March 2003, the final year of the plan.
●
●
●
method for valuing securities,
securitization of loans on the
Tokai Bank has consistently
which meant unrealized gains on
other.
maintained its capital ratio above
securities could not be included in
8.0 percent since the fiscal year
the Bank’s capital, exerted
March 1999, Tokai Bank disposed
ended March 1993, the year in
downward pressure on the capital
of ¥577.6 billion in problem loans
which the BIS standard was
ratio. Tokai Bank raised the capital
and reported a net loss of ¥185.7
introduced.
ratio, however, to 10.25 percent as
billion. In March 1999, the Bank
a result of bolstering its equity
received a capital injection of
1996, Tokai Bank disposed of
capital by means of issuing US$1
public funds through the issuance
¥801.9 billion in problem loans,
billion in perpetual non-
of ¥600 billion in convertible bond
which resulted in a net loss of
cumulative preferred securities and
type preference shares, and raised
¥346.2 billion for the fiscal year.
receiving public funds through
an additional ¥122.0 billion in
This required the use of internal
¥100 billion in subordinated loans
common stocks through the
reserves, leading to a drop in the
on the one hand, and reducing
allocation of these shares to third
capital ratio to 8.46 percent. In
risk-weighted assets through the
parties. As a result, Tier I capital
CAPITAL RATIO
In the fiscal year ended March
During the fiscal year ended
April 1996, the Bank issued its first
preference shares amounting to
¥100 billion to strengthen its
Table 8: BIS Equity Ratios
(Yen in billions)
As of
March 31, 1999
capital base, raising the capital
At the end of March 1998, the
adoption of the acquisition cost
As of
March 31, 1997
10.25%
1,179
1,055
21,783
9.09%
1,053
1,053
23,163
As of
March 31, 1996
Change from
March 31,
1998
ratio to 9.09 percent at the end of
March 1997.
As of
March 31, 1998
BIS capital ratio
Tier 1
Tier 2
Risk-weighted assets
12.60%
1,598
1,003
20,633
—
419
-52
-1,150
8.46%
956
956
22,576
●
●
●
increased more than ¥400 billion,
system and of the regional
which were issued is shown in
and the removal of problem loans
economy, the Bank has aimed to
Table 9.
from the balance sheet and other
boost its capital base through the
actions reduced risk-weighted
capital injection of public funds,
assets by ¥1.15 trillion. The capital
considering the obligation to
ratio therefore surged to 12.60
maintain a financial structure that
including projected future earnings
percent at March 31, 1999.
is conducive to the stable and
into account, repayment of the
smooth extension of credit by
public funds will be deferred four
CAPITAL INJECTION OF
PUBLIC FUNDS
absorbing risks that surface in the
years. The Bank plans to repay ¥60
future, such as increased credit risk
billion annually from the fiscal
Financial institutions have an
Redemption and Amortization
Taking a number of factors
from economic fluctuations and
year ending March 2004 to the
important obligation to meet
expanded unrealized losses on
fiscal year ending March 2008, and
customers’ healthy demand for
securities holdings from stagnant
¥300 billion in the fiscal year
capital and to contribute to the
stock prices. Based on this
ending March 2009. Naturally,
stability and growth of Japan’s
philosophy, we issued convertible
depending on the progress in
economy. Yet, in reality,
bankruptcies and rating
downgrades among financial
Table 9: Outline of Second and Third Preference Share Issues
institutions have shaken the
credibility of Japan’s financial
system both domestically and
overseas. The Law concerning
Emergency Measures for the
Revitalization of the Functions of
Preference share type
Preference share issue price
Total amount issued
Number of shares issued
Dividends per preference share
(yield)
Initial conversion price
Conversion period
Second preference shares
Third preference shares
Convertible bond type
¥2,000
¥300 billion
150 million
¥18.60
0.93%
¥563
For 7 years after 3rd year
Convertible bond type
¥2,000
¥300 billion
150 million
¥19.40
0.97%
¥563
For 6 years after 4th year
the Financial System was therefore
promulgated to restore the
soundness of healthy Japanese
bond type preference shares
reaching our profit targets, we may
banks by strengthening their
amounting to ¥600 billion in
repay ahead of schedule. The
capital.
March 1999, which were totally
deferral period will give the Bank
subscribed by The Resolution and
time to build its internal reserves.
As the only major city bank
headquartered in Nagoya, Tokai
Collection Bank, Limited (now
Bank has a predominant presence
renamed The Resolution and
amount of problem loans resulted
in the Chubu region of central
Collection Corporation). Further,
in a net loss for the fiscal year
Japan, the nation’s industrial
an outline of the second preference
ended March 1999, but paves the
heartland. In order to contribute to
shares and third preference shares
way for a return to profitability in
The disposal of a significant
the stability of the overall financial
●
the fiscal year ending March 2000.
Moreover, the steady execution of
our Plan to Revitalize Management
will create a solid base for earnings
growth. Management therefore
believes the Bank will be fully able
to redeem and amortize the
preference shares as scheduled.
Measures such as additions to a
reserve fund to cover the costs for
cancellation of stocks and
accumulation of internal reserves
will enable the large redemption
and amortization scheduled in the
repayment plan for the fiscal year
ending March 2009.
Dilution
Tokai Bank is taking several
measures to deal with dilution.
First and foremost, successful
execution of the Plan to Revitalize
Management, which would
increase the Bank’s share price, is
an important factor in preventing
dilution. Furthermore, the
Extraordinary General Meeting of
Shareholders in March 1999 newly
established an article for approving
the cancellation of shares not
exceeding 200 million.
●
●
Improved Efficiency
Under the Plan to Revitalize Management, we aim to raise our efficiency by building a new
marketing and support framework, and promoting the reform and improvement of the
administrative structure. Specifically, by enhancing personnel productivity and efficiency of
branches, we are targeting a reduction in expenses of ¥34 billion by the fiscal year ending
March 2003, reaping a net efficiency gain of ¥26.4 billion even after taking into account the
¥7.6 billion increase in expenses incurred to strengthen our focus on core customers. In the
fiscal year ended March 1999, we focused on reducing personnel expenses, achieving gross
cost reductions of ¥12.8 billion and net cost reductions of ¥9.7 billion.
●
●
●
PERSONNEL EXPENSES
approximately 650 with the
headquarters. In the first year of
Personnel Reductions
building of a “backless” branch
our Plan to Revitalize
system (branches without a back
Management, the fiscal year ended
number of Bank employees
office administration function),
March 1999, we achieved a staff
(excluding those on a contract
850 through the consolidation and
reduction of 313.
basis and local staff at overseas
change in status of domestic
offices) by approximately 1,700
branches, 100 through the closure
over five years from the 11,407 in
of and withdrawal from overseas
the fiscal year ended March 1998.
bases, and 100 through
including personnel reductions,
This will entail the reduction by
streamlining of other functions at
review of employee welfare
We plan to reduce the total
Personnel Expenses Reductions
As a result of initiatives
facilities and outsourcing to wholly
owned administrative subsidiaries
Table 10: Details of Cost Reduction Targets
(Year ending March 2003 (projected) compared to year ended March 1998)
(Yen in billions)
Consolidation and change in status of domestic branches, streamlining of account
representatives
-¥6.5 billion
Reform and improvement in administration structure (“backless” operation of back
office administration for each branch)
-¥5.5 billion
Consolidation and streamlining of overseas offices
-¥4.5 billion
Revision of procurement practices (more appropriate purchase prices)
-¥5.5 billion
Streamlining based on alliance with Asahi Bank
-¥3.0 billion
Revision of personnel management system, welfare facilities
-¥7.0 billion
Other
-¥2.0 billion
Gross effects from restructuring
-¥34.0 billion
(Increased costs coincident with bolstering business with core customers, etc.)
+¥7.6 billion
Net reduction in expenses
-¥26.4 billion
under supplies expenses), we
project net cost reductions of ¥24.9
billion under the Plan to Revitalize
Management. During the fiscal
year ended March 1999, we
achieved net cost reductions of
¥6.8 billion.
From winter of 1998, Tokai Bank
Table 11: Planned Efficiency Gains
(Yen in billions)
Personnel expenses
Supplies
Taxes
Total
(booking of personnel expenses
Year ended
March 1998 (A)
Year ended
March 1999 (B)
Change (B-A)
Year ending
March 2003 (C)
Change (C-A)
117.4
115.6
16.3
249.4
110.5
114.1
14.8
239.6
(6.8)
(1.4)
(1.4)
(9.7)
92.7
116.6
13.8
223.0
(24.9)
1.0
(2.5)
(26.4)
reduced employee bonuses by 20
percent. Directors’ compensation
was reduced by 15 to 25 percent
for the fiscal year ended March
1999 because of the net loss
●
●
●
reported and reduction of cash
initiated in September 1998. We
Japanese companies. At the same
dividends.
expect to have this process
time, we will eliminate
completed by March 2001. We
unprofitable offices and those that
also plan to designate
have become strategically less
approximately 10 branches for
important. Specifically, we plan to
mutual transfer with Asahi Bank.
reduce overseas bases by
Supplies Expenses
Total supplies expenses are
projected to increase by ¥1.0
billion under the Plan to Revitalize
As of the end of March 1999, we
approximately half, from 66 at the
Management due to increased
consolidated 9 branches, or 4
end of March 1998 to 36 by the
supplies expenses from
branches and 5 agencies, and
end of March 2001. During the
outsourcing to wholly owned
changed the status of 18 “general”
fiscal year ended March 1999, we
administration subsidiaries
branches into “shops.” Including
closed or withdrew from nine
(booking of personnel expenses
agencies that have been changed to
overseas bases.
under supplies expenses) and
specialized branches, we
increased depreciation expenses.
consolidated and changed the
plan to reduce employees
Supplies expenses will be reduced
status of 64 branches, thus
associated with overseas operations
on a real basis through
proceeding according to the plan.
by 1,300 from the level at the end
By the end of March 2001, we
of March 1998. This figure
rationalization measures such as
consolidation and change of status
Raising Efficiency of Overseas
includes 100 employees dispatched
of branches, reduction of overseas
Operating Bases
overseas from Japan.
bases, and review of procurement
practices.
In line with our focus on
supporting Japanese-affiliated
Outsourcing
We are actively proceeding with
companies, differentiating Tokai
Consolidation and Status Change
Bank from competitors and adding
outsourcing, with the aim of
of Domestic Branches
greater value to our services, we
lowering operating costs through
plan to maintain major U.S. and
enforcement and centralization of
domestic branch network under
European offices and an
specialized functions. A significant
the 11th Long-Term Management
appropriate network in Asia to
portion of headquarters and
Plan which began in April 1998
continue providing support to
branch administration functions
The consolidation of the
was to cover 33 branches, or 18
branches and 15 agencies, and to
change the status of 75 branches.
Closure of or Withdrawal from 30 Overseas Bases
These figures have been increased
to 42 branches, or 27 branches and
15 agencies, as a result of the
strategic alliance with Asahi Bank
Overseas branches
Overseas subsidiaries and affiliates
Representative offices, loan production offices
Total
16
30
20
66
Planned reduction
9
12
15
36
-7
-18
-5
-30
●
●
has already been outsourced to our
we are conducting reviews in light
wholly owned administration
of earnings trends and
subsidiaries, and in April 1999,
contribution to improving services
after consolidating these
to our core customers, namely the
subsidiaries, the Bank newly
middle and retail market.
outsourced the foreign exchange
Overseas, the Bank will eliminate
administration functions of the
operating bases whose functions
former International Operations
can be assumed by other bases and
Center. In April 1998, the major
those that do not have strong ties
functions relating to development
with Japanese-affiliated companies
and operation of the systems were
in Japan and overseas.
●
collectively outsourced to Central
Systems, Inc.
Closure and Sale of Real Estate
and Others
The Bank is going ahead with
the sale of sports facilities, the sites
of closed branches and recreational
facilities, as well as the
discontinuation and sale of
dormitories for single employees
and family housing. In order to
implement its efficiency measures
to a full extent, Tokai Bank also
abolished its American football
team.
Subsidiaries and Affiliates
Tokai Bank is reviewing its
subsidiaries and affiliates in terms
of their role and function within
the overall Group. We are studying
their necessity and clarifying their
strategic direction. Domestically,
Strategic Alliance with Asahi Bank
Having agreed to enter into a strategic alliance with Asahi Bank in September 1998, Tokai
Bank is now moving forward with specific plans to realize the benefits the alliance presents.
●
●
●
AIMS OF THE
ALLIANCE
Steering Committee
(Chairmen and presidents of both banks)
Geographically,
Tokai Bank has a
Determines strategy & agenda
strong presence in the
Chubu area while
Business Alliance Committee
(Planning directors and staff of both banks)
Asahi Bank has a
strong presence in the
Reconciles overall policies
Six business-specific subcommittees
Tokyo region. Both
institutions share a
strategic focus on
Domestic
Operations
Administration
Systems
serving medium- and
International &
Investment
Banking
Businesses
Affiliated
Companies
Fundamental
Financial Research
Branches
small-sized companies
and individuals. The
alliance will therefore strengthen
the management conditions and
cost competitiveness of both
banks, enabling them to provide a
higher quality of service to their
customers.
Looking forward, the two banks
are conducting joint research to
form a financial holding company
sometime between the fiscal years
ending March 2002 and March
2003. The resulting financial group
would be a “multi-regional bank ”
strengthened by the participation
of other leading regional banks
and other types of financial
institutions, with the objective of
forming one of the world’s
foremost middle-retail banks.
TRANSITIONAL STAGES
The alliance is progressing using
five issues listed above. In tandem
with these, each bank will
a two-stage approach. The first
complete its respective disposal of
stage addresses issues for
problem loans and promote
immediate action or consultation.
management efficiency through
The second stage encompasses
streamlining to prepare for the
issues to be determined based on
shift to the second stage.
the results of the first stage and
developments in the system reform
concerning financial holding
companies.
Second Stage
Both banks will evaluate the
effect of the first stage and, on the
condition that the establishment
First Stage
Improving customer convenience
● Capital alliance
● Raising efficiency
● Concentration of business resources
● Strategies to win under Japan’s “Big Bang”
●
The first stage will focus on
studying concrete measures for the
and provision of various systems
relating to financial holding
companies are complete, the banks
will then conduct full-scale
considerations of establishing the
financial holding company, with a
target date set in the period
●
●
●
The six subcommittees will deal with the following 46 issues:
Development of new electronic banking products; mutual use of existing products
Development of new consumer loan products
● Investigation of new products related to administrative deregulation and the revision of laws, etc.
● Joint development of Internet banking
● Development and mutual use of investment trust products
● Joint research and development of private banking businesses
● Cooperation in work relating to the Housing Loan Corporation, a government organization
● Mutual consignment and joint operation of loan-related tasks
● Development of joint advertisements, unification and joint purchasing of gifts to customers
● Mutual utilization of business information
● Exchange of information regarding customer relations methods for the middle and retail market
segments and the training of account representatives
● Research on branch profitability management and evaluation system, and management indicators
● Joint management of telephone banking call center
● Joint development of venture enterprise supporting business
● Joint provision of overseas information and market trends, etc., to customers
● Joint holding of study and training classes for bank employees, etc.
● Joint purchasing and spot lending of foreign currency cash and travelers’ checks
● Development of ATMs for foreign currency deposit accounts
● Standardization of foreign exchange related fees
●
Subcommittee for Domestic
Operations
(19 Items)
●
Joint development of systems; investigation and research of joint management of
administration systems
● Integration of cash collection and delivery related companies
● Year 2000 compliance
● Consideration of payment with cards using ATMs by customers of both banks
● Joint studies for consolidation of foreign exchange operations
●
Subcommittee for
Administration Systems
(5 Items)
Collaboration in asset management
Mutual cooperation in development of financial products, etc.
● Cooperation in foreign exchange services for customers, derivatives, funds acquisition, etc.
● Collaboration of securities subsidiaries
● Joint development and sharing of various systems
● Centralization of domestic and overseas back-office operations
● Sharing of information from overseas economists, etc.
● Collaboration of overseas bases
●
Subcommittee for
International & Investment
Banking Businesses
(8 Items)
●
Collaboration in personnel dispatch
Collaboration in physical inspection of real estate collateral
● Collaboration of think tanks
● Collaboration of real estate companies
Subcommittee for Affiliated
Companies
(4 Items)
●
Subcommittee for
Fundamental Financial
Research (4 Items)
●
Subcommittee for Branches
(1 Item)
●
Others
(5 Items)
●
●
Profitability analysis of individual customers
Individual customer loan related research
● Joint research on prepayment risks
● Joint research on credit risks
●
Mutual transfer of domestic branches
Studies and research concerning financial holding company
Joint promotion of fixed contribution pension business
● Consideration of joint purchasing of furnishings, fixtures, equipment, etc.
● Studies on establishment of servicer company
● Consolidation of branches by each bank independently in anticipation of the alliance
●
(as of May 31, 1999)
between the fiscal years ending
the core, the banks will move
bank) with the participation of
March 2002 and March 2003. With
forward to establish a new
other regional banks and other
this financial holding company at
financial group (a multi-regional
types of financial institutions.
●
The financial group will be open
●
fixed contribution pensions, and
to the participation of other
will consign the record keeping to
financial institutions, as long as
a company established primarily
they meet the prerequisites of
by the Industrial Bank of Japan
having completed restructuring
and Nomura Securities.
STATUS OF
PREPARATION FOR
SECOND STAGE
As mentioned above, entry into
the second stage will depend on
the results of the first stage and the
efforts and the disposal of their
The two banks will cooperate in
STATUS OF PROGRESS
AT FIRST STAGE
developing business in the field of
Progress to date is as follows:
problem loans at an early date.
●
establishment and provision of
various systems relating to
financial holding companies. At
present, the two banks are
conducting joint research of legal
Cross-shareholdings (actual as of March 1999)
● Tokai’s holding of Asahi shares: purchase an additional
10,207 shares for a total of 25,379 shares
● Asahi’s holding of Tokai shares: purchase an additional
10,751 shares for a total of 26,074 shares
● Elimination of fees on mutual use of ATMs for cash withdrawal
(actual for March 1999, compared with March 1998)
● Asahi Bank customers increased use of Tokai Bank ATMs by 70%
● Tokai Bank customers increased use of Asahi Bank ATMs by 97%
● Elimination of fees charged for transferring funds between the two banks
using ATMs (actual for March 1999, compared with March 1998)
● Asahi Bank customers increased use of Tokai Bank ATMs by 37%
● Tokai Bank customers increased use of Asahi Bank ATMs by 39%
● Mutual utilization of M&A information
● Mutual consignment of management of ATMs outside of branches
● Joint establishment of ATM maintenance company
● Launch of joint projects in fundamental financial research fields
● Mutual marketing of investment trust products
● Establishment of joint homepage
● Mutual consignment of clearing of bills
● Co-handling of internal mail
● Joint marketing of foreign currency deposit accounts with currency
options attached
● Joint holding of seminars on overseas information
● Mutual cooperation in international factoring business
● Mutual consignment of collection of taxes and other public money
● Development of joint advertising
●
From October 1998
and tax systems, among others, as
well as case studies of U.S. and
European financial institutions, to
December 1998
establish the financial holding
company between the fiscal years
December 1998
ending March 2002 and March
2003.
December 1998
February 1999
February 1999
March 1999
April 1999
April 1999
From May 1999
From May 1999
June 1999
June 1999
June 1999
November 1999 (projected)
Ongoing
Company System & Non-Board Member Executive
Director System
●
CURRENT STATUS OF
THE COMPANY SYSTEM
●
●
Chubu, Tokyo and Kansai regions.
We have also clarified the role of
Outline of Company System
In the company system, the
the Banking Companies as profit
Bank’s operations are divided into
introduced a decentralized
centers whose mission is to
quasi-autonomous entities, each
business management system
maximize earnings, and removed
managing its business using its
called a “company system” as part
from them the divisions providing
own capital. This move is aimed at
of the 11th Long-Term
support, as well as the functions of
making the companies more agile
Management Plan. In view of
business planning and new
in responding to changes in their
several factors that have since taken
product development. As a result,
operating environments and
place, including the strategic
we have clearly defined
strengthening their commitment
alliance with Asahi Bank, the
responsibility for the planning
to enhancing efficiency and service
capital injection of public funds
section and that for the business
as profit centers, thus contributing
and the Plan to Revitalize
promotion section within
to the Bank’s objective of
Management, and reflecting on the
domestic banking operations,
improving earnings.
achievements and lessons learned
thereby clarifying tasks and
There are in all five companies in
in the past year, the system
accountability for achieving
this system. Companies created for
underwent a progressive
various goals set in implementing
domestic banking operations are
reorganization in May 1999 with
the Plan to Revitalize
the three regional companies,
an emphasis on domestic banking
Management.
namely, the Chubu Banking
In May 1998, Tokai Bank
Company, the Tokyo Banking
operations, and Tokai Bank is
again moving full speed ahead
with the new system.
As a result, we are building a
more powerful system for the
Chubu Banking Company
General Meeting
of Shareholders
Chubu Retail Banking Company
execution of our strategies and
policies outlined in the Plan, with
due consideration of our regional
Board of
Directors
Board of Corporate
Auditors
Corporate Auditors
Kansai Banking Company
strengths within the customer
segments served and the branch
network.
Corporate Auditors’
Dept.
Executive
Committee
Banking Company and the Retail
Banking Company, and
establishing Banking Companies
Wholesale Banking Company
Investment Banking Company
Recent moves have entailed
reorganizing the Middle & Retail
Tokyo Banking Company
Planning and
Administration
Headquarters
Business Support Unit
Operations Administration Unit
Loan Promoting Unit
responsible for business in the
●
●
working toward the future
Company and the Kansai Banking
Company, and comprising the
Wholesale Banking Company, the
Head Office, the Tokyo Main
Office and the Osaka Branch. The
Investment Banking Company was
created to focus on investment
Gross business profit by company
for the year ended March 31, 1999
(Yen in billions)
67.4
(19%)
Retail Banking Company, which is
part of the Chubu Banking
Company, concentrates on
developing retail business with
individual customers in the Chubu
and administration headquarters,
comprising the divisions
218.1
(63%)
financial holding company
Net business profit by company
for the year ended March 31, 1999
(Yen in billions)
39.2
(26%)
resources to the various
companies, and handling audits
and credit evaluation.
Since the mission of each
company is to realize maximum
profit, the divisions that support
domestic banking operations have
Support Unit whose responsibility
is to promote various measures.
Moreover, other divisions that
differ from the profit centers in
improved results of each company
performance of the Tokai Group as
63.2
(42%)
49.5
(32%)
a whole, each company’s
performance is gauged through
means using the rate of return on
Middle & Retail Banking Company
Note : The above charts are presented on an internal budget
management basis.
the company’s equity, for example,
and transfer pricing is
implemented for adjustment and
allocation of earnings and costs
among companies.
their purpose have also been
separated from the companies. The
task of dealing with and recovering
problem loans has been assigned to
a Loan Promoting Unit, and
administration, systems
development and management
have been assigned to an
Operations Administration Unit.
been separated from the
companies to form a Business
envisaged. In order that the
contribute to the greater
and administration, provide
coordinating and allocating
the company system is an initial
step toward the formation of the
responsible for overall planning
control for the company system,
company. Assuming the provision
taxation, the implementation of
region, relying heavily on
specialized branches. Planning
formation of a financial holding
of legal systems such as for
60.9
(18%)
banking and transactions with
non-Japanese entities. The Chubu
●
Vision of a Financial Holding
Company in the Future
As part of the strategic alliance
between Tokai Bank and Asahi
Bank, the two institutions are
NEW APPROACHES TO
CORPORATE
GOVERNANCE
As Japan’s financial institutions
enter into full-fledged megacompetition, banks are expected to
make appropriate management
decisions faster than ever, and to
strengthen compliance.
Aligning corporate governance
with global standards, in June 1998
Tokai Bank reformed the Board of
Directors and introduced the NonBoard Member Executive Director
●
system. Concurrent with the
above-mentioned reform, the
●
more effective decision making.
In April 1999, the retirement age
●
members and strengthening the
bankwide compliance function.
corporate audit function was
for directors was revised, and as a
Against this background, in June
reinforced to bolster the function
result, the chairman will now retire
1998 the number of corporate
of checking the performance of
at the age of 70, and the president
auditors was increased from 4 to 5
management.
and advisors at the ages of 65 and
at Tokai Bank, while in June 1999
75, respectively.
the Corporate Auditors’
Department was newly established
System Overview
The new system affords the
Bank’s top policy-making body, the
Board of Directors, the ability to
Non-Board Member Executive
with the aim of bolstering the
Directors
support role provided to auditors
Non-Board member executive
make management decisions
directors are elected by the Board
speedily and to supervise business
of Directors. They are given the
execution appropriately. The
authority for execution from the
functions and responsibilities of
representative director concerned,
directors have been revised, and
and focus on the task of
directors have been classified as
implementing the decisions of the
board members as per the
Board. At Tokai Bank, the
Commercial Code and non-board
President of each company is a
members who focus on business
non-Board member executive
execution. Their respective
director, reflecting the system with
functions are outlined below.
clearly defined roles for directors
by the staff positioned there.
(i.e., non-Board member directors
Members of the Board of Directors
Members of the Board of
are in charge of business
execution) and they are, in turn,
Directors are elected at the General
supervised by the members of the
Meeting of Shareholders and
Board of Directors.
become part of the Board of
Directors, which sets and oversees
Strengthening the Corporate
fundamental strategies and
Auditors’ Function
operating policies for Tokai Bank
The Corporate Auditors are
and its group of companies. The
expected to cover an increasingly
number of directors was reviewed,
wide range of areas as part of
and a system was implemented
independently auditing the
that will contribute to speedier,
performance of the Board
Year 2000 Readiness Disclosure
●
WHAT IS THE YEAR 2000
PROBLEM?
The “Year 2000 problem” arises
from the inability of some
●
FULL ATTENTION AND
COMMITMENT OF
MANAGEMENT
The management of Tokai Bank
●
of the scope of the potential impact
of the Year 2000 problem in 1996.
Because of the importance of the
issue, the Year 2000 Committee
computer hardware or software
places a high priority on dealing
(hereafter, the “Committee”) was
systems to correctly process dates
with the Year 2000 problem, as
established by a resolution of the
after the year 2000. Generally,
inadequate preparation and
Board of Directors in September
computers recognize the year using
compliance could have far-
1997 as a controlling and
the last two digits of the year.
reaching consequences, not only to
coordinating body. The
During the initial days of the year
computer systems, but also to
Committee’s purpose is to create
2000, the year would be displayed
office equipment, office facilities,
and monitor the progress of the
on the computer as “00” (year);
networks, and various services
action plans and schedule for Year
however, an unamended system
which the Bank provides,
2000 compliance. Since the
may erroneously recognize this as
including interfaces with
establishment of the Committee,
1900. Moreover, since 2000 is also
customers and with affiliated
the domestic and overseas sections
a special leap year (an event that
companies. We also fully recognize
and branches of the Bank have
occurs once in 400 years), there is
the need to address a wide range of
been proceeding in their work for
an additional possibility that the
issues, such as assessment for
Year 2000 compliance, based on
system might stop or cause
mitigation of other risks arising
the policies and schedule decided
incorrect operations if the
from possible Year 2000
by the Committee.
program was developed without
noncompliance (e.g., credit risk,
due regard to this special leap year.
liquidity risk) that the Bank could
made up of 19 divisions including
be exposed to, as well as the
the Corporate Planning Division,
of modern life and industry.
necessity of establishing an
Operations Planning Division,
Especially at financial institutions,
organizational framework based
Systems Division and Investment
computers play a vital role in
on the Bank’s contingency plan.
Banking Planning Division, with
various operations, including
We view the Year 2000 problem as
each Division head as a member.
interest calculation and maturity
a critical mission with very high
The chairman of the Committee is
control. Therefore, full compliance
priority, and are therefore carrying
a Senior Managing Director and
is required in order to avoid an
out the measures required to
Board member appointed by the
impact on customers and a
achieve full Year 2000 compliance.
Board of Directors. The
Computers are an integral part
disruption in the economy.
BANKWIDE
ORGANIZATIONAL
STRUCTURE
The Bank started an assessment
The Committee is currently
Committee is directed by a
Managing Director who is also a
Board member. Progress made in
addressing Year 2000 compliance
issues is closely monitored by the
●
●
●
Committee and its summary is
complete. In addition, we have
subsidiaries and affiliates, and have
reported monthly to the Board of
completed interface tests with
been completed for the most part.
Directors and non-Board Member
external settlement systems
Executive Directors’ Committee,
providers, including the systems
while the details of progress are
offered by financial industry
reported to the Executive
associations such as the Japanese
Committee approximately every
Bankers Association System, BOJ
three months.
Net, BANCS and SWIFT, and have
This process ensures
confirmed that data interface will
management’s active involvement
be carried out without any
in the matter, including close
problem. Compliance measures
monitoring of the progress and
for other systems have also been
additional instructions for pending
completed.
Facilities and Machinery
Based on the procedures
developed by the Committee,
assessment was made of computer
hardware and software,
communication hardware,
buildings, facilities, external
operating hardware and services at
headquarters and all domestic and
overseas branches and offices, and
Year 2000 compliance measures for
these systems, machinery and
facilities have been implemented
accordingly.
Systems
Renovation and validation of all
the Bank’s critical systems are
Bank’s Year 2000 compliancerelated cost was estimated at
approximately ¥4.2 billion on a
non-consolidated basis, and
approximately ¥6.1 billion for the
Tokai Bank Group as a whole,
including domestic and overseas
matters.
SCOPE OF ASSESSMENT
AND GENERAL POLICY
FOR COMPLIANCE AND
PROGRESS TO DATE
ESTIMATED COST FOR
YEAR 2000
COMPLIANCE
Year 2000 compliance checks
were completed on facilities and
machinery used by the Bank, such
as safes, elevators and machinerysecurity systems, following receipt
of written confirmation from
vendors and manufacturers.
Additionally, we have carried out
internal confirmation tests for
systems whose failure would have a
critical impact on operations.
Moreover, confirmation for Year
2000 compliance is carried out
whenever new systems, hardware
subsidiaries and affiliates. These
estimates include costs of hardware
and software investments,
manpower and implementation of
contingency plans, as well as the
cost of carrying out connection
tests with the Bank’s electronic
banking customers. However, these
estimates do not include the costs
of systems renovations in which
Year 2000 compliance was achieved
as part of the overall functional
enhancement of such systems, as
they cannot be identified
separately.
and/or facilities are introduced.
Reference
Affiliates
Compliance measures have been
implemented for the systems,
machinery and facilities used by
the Bank’s domestic and overseas
We introduced a renovated
system for the Bank’s accounting
system in Japan (the Third
Generation On-line System)
between 1984 and 1990, and
●
completely renewed the software
for the critical systems and the
●
CONTINGENCY PLAN
We have identified potential
●
circumstances, and the Bank will
continue working with these
customers.
relevant hardware in each office.
risks that could be caused by the
During this renovation, systems
Year 2000 problem on a bankwide
were developed to support new
basis and developed a contingency
customer’s system, achieving Year
types of transactions, while others
plan to prepare for the worst-case
2000 compliance is critical to avoid
were renovated to reduce
scenario, in view of the possible
any disruption. In this regard, we
operation time. At that time, under
disruption caused not only by
have already started our inquiry on
the standardization of
systems, machines and equipment,
the compliance status of our
development methods for date
but also by external factors and
customers, and we request your
processing, the Century Code was
breakdowns of the social
understanding and cooperation
added, thereby taking care of a
infrastructure.
when similar inquiries are made.
substantial part of Year 2000
compliance efforts.
We completely renewed the
From the viewpoint of each
Based on this contingency plan,
the Bank will be conducting
various drills that assume on-line
OTHER
The Bank’s internal audit
Bank’s overseas accounting system
and other troubles, and will have
function is integrally involved in
between 1993 and 1996. Year 2000
extra measures in place for the
the Year 2000 compliance
compliance was substantially
crucial period covering the year-
program. In addition, in order to
achieved at that time, again
end and the beginning of the year,
deal with potential legal liabilities
applying the standardization of
such as creating back-up files for
arising from the Year 2000
development method for date
transaction data, confirming the
problem, the Bank’s Compliance
processing by adding the Century
proper operation of systems and
Division has been put in charge of
Code.
machinery, and having adequate
coordinating legal matters, and a
manpower on stand-by.
system of checks is now in place.
For renovation of the Third
We will continue to provide the
Generation On-line System,
approximately ¥45 billion was
TO THE CUSTOMERS
spent for software development
The Bank has been carrying out
(approximately ¥15 billion) and
confirmation testing for customers
hardware changes (approximately
who have contracted for electronic
¥30 billion). Approximately ¥5.8
banking services, such as
billion was spent for renewal of the
information provided through PCs
new overseas system.
and data transmission using
magnetic tape or floppy disks.
However, there are cases where
confirmation testing takes time
due to the customer’s
Bank’s Year 2000 compliance status
for your reference.
While the Bank is making every effort to achieve
compliance and to assess the potential impact
and risk arising from Year 2000 issues, we would
like to make it clear that the Bank does not
make any representation, nor offer any
guarantee in this regard, and the Bank shall not
be held liable as a result of this statement nor be
considered to have waived any of its rights.
(Information provided is as of June 30, 1999.)
Topics
●
INVESTMENT TRUSTS
As part of Japan’s financial Big
Bang, banks were allowed to begin
selling investment trusts in
December 1998. In the current
low-interest-rate environment,
customers are looking for new
ways to manage their financial
assets. Tokai Bank has responded
to the greater diversity in asset
management needs by initiating
sales of securities investment trusts
●
●
Investment Trust Products
S-Fund
A (Jan/April/July/Oct) Invests in domestic fixed income securities to generate stable returns
B (Feb/May/Aug/Nov)
C (Mar/June/Sep/Dec)
U-Fund
Japan Bond Index
Indexed fund on domestic bond market
Japan Stock
Indexed fund on Nikkei 225 stock average
Actively managed. Invests in overseas stocks.
Global Stock A
Uses currency hedging.
Actively managed. Invests in overseas stocks.
Global Stock B
No currency hedging.
Actively managed. Invests in U.S. stocks.
U.S. Stock A
Actively managed. Invests in U.S. stocks.
U.S. Stock B
No currency hedging.
Emerging Bond A
Invests in emerging market bonds. No currency hedging.
Emerging Bond B
Invests in emerging market bonds. Uses currency hedging.
Foreign Bond
Actively managed. Invests in overseas bonds and currencies.
Invests in domestic short-term instruments. Managed to generate
Money Market
stable returns while maintaining net asset value.
Invests in short-term U.S. dollar fixed income securities.
Asahi Tokyo U.S. Bond Open
at all domestic branches.
Products include the S-Fund and
the U-Fund, both developed and
managed by a Tokai group
1999 we began selling the Asahi
Miyoshigaoka Branch is open
Tokyo U.S. Bond Open.
during the same hours as the
Tokai Bank’s funds are no-load
shopping center, including
company, Tokai Asset Management
funds — in other words, they carry
Saturdays and Sundays. Locating
Co., Ltd. The S-Fund invests in
no front- or back-end sales
branches in high-traffic shopping
domestic government bonds to
charges. This feature affords
centers facilitates customer access
generate stable returns. The U-
investors greater freedom to
to Tokai Bank and contributes to
Fund is an umbrella scheme fund,
manage their assets based on their
efficient use of resources and a
a package of 10 different funds
own judgment. Customers may
low-cost branch network.
among which customers may freely
also switch investments among the
switch their investments.
U-Fund’s offerings by telephone.
Moreover, as part of our strategic
We intend to further improve
alliance with Asahi Bank, in April
customer service by system
PROJECT AND
STRUCTURED FINANCE
Since the inception of the
integration and an extended lineup
Project and Structured Finance
of various attractive funds.
(P&SF) team in early 1997, the
P&SF team has, by early 1999,
IN-STORE BRANCHES
In October 1998, Tokai Bank
Comprehensive information on
investment trusts for retail customers
supports our entry into this business.
already established itself as a
respected and consistent player in
opened its first in-store branch, the
the Asian project finance market.
Miyoshigaoka Branch—SS Shop
Based on its focus as a purveyor of
Miyoshigaoka, at a shopping center
quality advice and arranging
in Miyoshi, Aichi Prefecture. The
services to project developers,
●
The Meizhou
Wan Power
transaction,
one of several
high-profile
deals Tokai
Bank
arranged, was
selected as
both IFR Deal
of the Year
and PFI Deal
of the Year for
1998.
●
●
prevalent in 1998, and are, in fact,
1997, received and continues to
a testament to Tokai Bank’s unique
receive a strong strategic emphasis
capabilities in the project finance
within Tokai Bank.
field. Relying on its experienced
team of professionals, Tokai Bank
was able to focus on transactions
JAPANESE LEVERAGED
LEASES
that had solid fundamentals,
Using innovative schemes in
strong ownership and viable
structured lease financing, Tokai
commercial and financial
Bank has secured mandates in a
Tokai Bank’s P&SF team has
arrangements. Above all, Tokai
cross-section of industries as well
proven its ability to create value in
Bank demonstrated its ability to
as in the traditional aircraft finance
the most demanding conditions.
apply well-proven structuring
market. In April 1998, we arranged
Tokai Bank’s abilities — now
principles in turbulent times, while
the equity portion of a Japanese
proven over a range of transactions
relying on the experience of team
Leveraged Lease (JLL) scheme to
encompassing the Meizhou Wan
members, consistency of approach
finance PCS telecommunications
power project in the PRC, the
and its commitment to clients, to
equipment for Sprint Corporation
Nong Khae power project (first
seamlessly execute these
in the United States. After the
Small Power Producer financing in
transactions.
Japanese corporate tax reform of
Thailand since the start of the
Tokai Bank believes this past
Asian financial crisis), and the
year’s turbulence proved to be an
became effective on October 1,
Nakayama Kyodo Hatsuden power
excellent testing ground for our
1998, the Bank has been pursuing
project (first project financing in
skills which will equip us well to
the opportunity to arrange a JLL
Japan) — have been specifically
continue creating value for our
for a domestic customer. In March
recognized by the market as
valued clients. In fact, our ability
1999, the Bank successfully
reflected in the selection of the
to master this difficult period has
received a mandate from IDO
Meizhou Wan Power transaction as
provided us with additional
Corporation of Japan to arrange
both the International Financing
confidence for the years to come as
both the debt and equity portion
Review Deal of the Year and the
we seek to serve our clients’
of JLL financing of its new digital
Project Finance International Deal
continued interest in Asian
telecommunications equipment by
of the Year for 1998. Tokai Bank
infrastructure development. Tokai
applying cross-border lease
acted as Arranger and PRC
Bank will continue to look for
arrangement techniques to our
Documentation Bank in the
opportunities to arrange
core domestic customer in the
Meizhou Wan Power transaction.
financings for projects and Private
telecommunications industry.
These achievements have been
Finance Initiatives in Japan and
particularly noteworthy given the
Asia, an activity which has, since
very difficult market conditions
the inception of the team in early
limitations on cross-border JLLs
●
●
●
and trade finance activities in the
This will expand both our business
region, which may result in
base and sources of income.
downward pressure on margins
During the fiscal year ended March
Group completed its first year of
across the markets.
1999, we increased the number of
operation in early 1999. In
Notwithstanding the increased
headquarters personnel assigned to
accordance with our original
competitive activity, we remain
each region, dispatched derivatives
objectives, the Group focused
confident that the Group will
specialists to core branches,
upon the provision and arranging
continue to show steady growth in
including the three main offices,
of financing, risk mitigation and
its origination activity and
and trained and supported branch
advisory services to our global
profitability. In addition,
staff, bolstering our drive to
customers involved in the
throughout this year, we intend to
further strengthen the services we
execution of cross-border trade
deploy more resources throughout
offer bankwide.
flows mainly for essential
our branch network in Japan to
Given the continuing low yen
commodities and priority capital
allow us to succesfully deliver a
interest rates during the fiscal year
goods. In this relatively short time,
greater structured trade product
ended March 1999, customers
the Group has assisted in arranging
capability to our domestic
expressed strong interest in
the pre-financing of aerospace
customer base. By relying on the
products that offer better returns.
projects from South Korea to the
Group members, proven expertise
In response, we developed three
U.S.A.; structured and financed a
in combining a mix of traditional
types of U.S. dollar time deposits
medium-term receivables
trade finance capabilities with
that incorporate currency options
financing facility covering the
more complex structured trade
and aggressively marketed them to
export of telecommunications
financing and risk mitigation
both corporate clients and affluent
infrastructure equipment from
techniques, we remain able to
individuals. Sales were strong,
North America to Japan; provided
provide a high degree of flexibility
exceeding 1,500 contracts during
a syndicated guarantee facility for
and speed in responding to our
the year. We also introduced new
the export of container vessels
customers’ specific requirements in
products that matched the fund-
from South Korea to Germany;
an increasingly demanding and
raising needs of core customers,
and arranged and financed a
competitive environment.
including swap and interest rate
STRUCTURED TRADE
FINANCE
The Structured Trade Finance
option products indexed to the
number of bilateral import and
post-export financing facilities for
our correspondent bank customers
in Northeast and Southeast Asia.
DERIVATIVE PRODUCTS
To further improve and
differentiate the financial services
prime rate, as well as loans
incorporating derivatives.
We are devoting particular
it offers to its core customer
attention to developing products
financial crisis in Asia, it is
groups of middle-market and retail
that respond to diversifying
expected that more banks will
clients, Tokai Bank is actively
customer needs. Areas of focus
resume their commercial lending
developing its derivatives business.
include continuing to develop
With the apparent easing of the
●
●
●
deposit and loan products
new airport will operate 24 hours a
project, thus contributing to the
incorporating derivatives, as well
day and serve as an international
region’s further development.
as preparing to provide equity and
transportation hub, giving Chubu
credit derivative products that we
a direct link to the rest of the world
are now permitted to directly
that will support the region’s
handle as a result of revisions to
industrial and cultural
banking regulations. One of the
development.
first such products to be
Central Japan International
introduced is a deposit linked to
Airport Co., Ltd. was established in
stock price movements, which we
May 1998 to move the project
plan to begin offering to core
forward. As a key player in the
customers at all branches in the
Chubu economy, Tokai Bank is
first quarter of the fiscal year
playing an important role in the
ending March 2000.
realization of this long-term
We have also begun marketing
project. We assigned personnel to
The Central Japan International Airport
will contribute to a stronger economy in
Chubu, where the Bank is based.
2005 WORLD
EXPOSITION
jointly with our strategic alliance
Central Japan International
partner Asahi Bank a U.S. dollar
Airport Co., Ltd., and are the
time deposit incorporating
largest private shareholder in the
central theme, the World
currency options. In addition, the
project. In addition, we provide
Exposition will be held in Aichi
two banks are conducting joint
advice and propose methods for
Prefecture in March 2005.
research into methods for
financing the airport’s
In contrast to past expositions,
controlling prepayment risk and
construction, and support related
which had focused on showing the
credit risk.
regional projects by deploying our
material aspects of human
financial expertise and providing
progress, the 2005 Expo will
information and proposals.
emphasize the coexistence of
CENTRAL JAPAN
INTERNATIONAL
AIRPORT PROJECT
Japan’s industrial heartland, the
With a total project budget,
people with the Earth’s
including the airport and ancillary
infrastructure, of ¥3 trillion, the
Chubu region has a population
new airport is projected to
exceeding 20 million. Construction
generate over ¥2.7 trillion in
of the new international airport to
economic knock-on effects for the
serve the region’s transportation
Chubu region and ¥5.5 trillion
needs in the twenty-first century
nationwide. As the leading bank in
has begun, with opening of the
Chubu, Tokai Bank will continue
airport scheduled for 2005. The
to actively support the new airport
With “Nature’s Wisdom” as the
Tokai Bank is actively involved in
working to make the 2005 World
Exposition in Aichi Prefecture a
success.
●
●
●
environment and resources. By
looking at the spiritual aspects of
human life in a new light and
uncovering nature’s hidden
wisdom, it is hoped that the
exposition will point the way to a
sustainable path for continued
human progress. Based on these
themes, ideas are being gathered
from around the world and
concrete proposals are being
studied. We will continue holding
discussions and building
enthusiasm for the event.
Tokai Bank has assigned three
staff members to the Japan
Association for the 2005 World
Exposition. Through our
participation in various
committees and project teams, we
are also playing a leading role in
planning event sites and creating
concepts for the exposition.
Risk Management
Tokai Bank has created an effective system for evaluating, selecting and controlling all
types of modern banking and financial risks. This system was designed to involve senior
management in the process of managing risk while disseminating risk control techniques
throughout the Bank’s operations.
●
TOKAI BANK’S RISK
MANAGEMENT
PHILOSOPHY
Banks face a variety of risks in
●
RISK MANAGEMENT
STRUCTURE
Concurrent with the
●
risk-related information directly to
top management on a daily and
monthly basis and as needed (for
introduction of the “company
example, in an emergency) and
the course of their business
system” in May 1998, Tokai Bank
implements measures to control
operations, including market risk,
formed a planning and
risks in cooperation with the
credit risk, liquidity risk,
administration headquarters for
relevant divisions.
operational risk and legal risk. The
monitoring and managing risk
impact of these risks upon bank
throughout the Bank, comprising
management has become
in the main, the Risk Management
increasingly significant as the
Division, ALM Division, Credit
diversity and complexity of the
Planning Division, Operations
financial industry have grown.
Planning Division and Compliance
Risks have different characteristics. Some are measurable,
Division.
Note: Risk Management Committee
The Risk Management Committee was created
when the “company system” was implemented
to integrate and strengthen bankwide market
and credit risk management. While monitoring
risk positions and reporting to management, the
committee performs the following functions:
1) Develops forecasts and scenarios for interest
and market rates.
2) Determines fundamental policies for
managing market, credit and liquidity risk.
3) Conducts risk/return analyses using RAROC.
In May 1998, we newly
some are not; some are potential
established the Risk Management
sources of profit, others are profit-
Division as the Bank’s risk
reviews to manage traditional
neutral. Accurately understanding
management section to monitor
credit risk, as well as front-,
and analyzing risk positions and
market risk and credit risk from a
middle- and back-office functions
reporting that information to
bankwide perspective. This
in increasingly complex market
management are critical to
division reports directly to top
operations, are clearly separated
maintaining sound management
management, and in the future will
and their responsibilities are duly
and stable earnings. Tokai Bank
be responsible for unifying the
distinguished from one another,
has therefore built a risk
management of the broad array of
thus creating a system of mutual
management organization through
risks we face, including operational
checks between divisions.
means such as establishing an
risk and other management risks.
independent division in charge of
The Division serves as the
profile is reported to the Non-
risk management and creating a
coordinator for the Risk
Board Member Executive
framework for the integrated
Management Committee (see
Directors’ Committee each month
management of different types of
note) and oversees all related
to foster broad awareness and
risk.
divisions. In addition, it reports
Credit approval and credit
The bankwide revenue and risk
●
●
●
management of risks by the Bank’s
Overview of Tokai Bank’s Risk Management Structure
management at large.
Staffed with personnel who have
Resolution
Risk Management Committee
Executive Committee
(Coordinator: Risk Management Division)
Report
broad knowledge and experience,
the Audit Division performs
comprehensive internal audits. The
division reports the results of
audits directly to top management.
Overall Supervision:
Risk Management Division
●
●
Discussion of risk management policies
Monitoring of bankwide risk
(Risk management system, gauging risk exposure)
CREDIT RISK
Credit risk is the possibility of a
loss occurring as a loan becomes
unrecoverable due to the
Authority for Various Risks
bankruptcy or deterioration in
Planning & Administration
Headquarters
Risk Management Division (Market risk)
ALM Division (Asset-liability management, yen
liquidity risk)
Credit Planning Division (Credit risk)
Operations Planning Division, Audit Division
(Operational risk)
Compliance Division, Corporate Planning
Division, Customer Service Division
(Legal risk, reputational risk)
credit quality of a borrower. As this
type of risk is inherent in our core
lending business, managing credit
risk entails controlling the total
amount of credit risk to remain at
a reasonable level in the light of the
Treasury & Securities Division
(Foreign currency liquidity risk)
Systems Division (EDP risk)
International Credit Division
(Country risk)
Bank’s capital, as well as taking on
risks while securing an appropriate
level of coverage and profitability.
Tokai Bank has established a
Risk Management
credit risk management system to
Chubu Retail Banking Company
manage our entire organization in
line with this fundamental
philosophy. In addition, we have
formed a credit policy to provide
guidelines to all staff involved in
lending; implemented a credit
Business Support Unit
rating system to establish standards
Operations Administration Unit
for credit risk management; built a
Loan Promoting Unit
Branches and Affiliated Companies
management system based on
credit metrics to secure stable
earnings while controlling risks;
●
●
●
Credit Risk Management System
Board of Directors
Non-Board Member
Executive
Directors’ Committee
Summary of risk
conditions
Key issues for
business execution
Executive Committee
Risk Management
Committee
① Bankwide
risk profile
➁ Risk management policies
Surveying, Research and Development
● Industry surveys
● Credit risk management methods
● Credit-related systems development
Credit Planning Division
Corporate Research Dept.
Preliminary audit of
major borrowers
● Rating system
● Credit evaluation system
Large credit accounts
Significant and exceptional loans
and guarantees
Director in
Charge of Credit
Credit Planning Division
Lending Strategies and Policies
● Credit policies
● Credit rating system
Investment and
Credit Conference
Credit Review Division
●
●
Self-assessment reviews
Credit rating reviews
Monitoring
● Bankwide credit risk profile
● Major individual customers
Companies
Credit Divisions
Approval
Request
Branches
General credit risk management
Individual credit checking function
Reporting to management
and developed credit risk
Planning Division that is
monitoring risks, the division
management procedures and
independent of the activities of
develops credit metrics to
credit-related systems to provide
each company. The Credit
effectively manage the Bank’s
infrastructural support for all of
Planning Division establishes
credit portfolio.
these systems and procedures.
fundamental credit-related
The Credit Planning Division
strategies and rules, including
also studies credit risk
Credit Risk Management System
credit policies and the credit rating
management methodologies and
Control of Credit Risk Management
System
system. In addition, the division
develops credit-related systems.
monitors the Bank’s overall credit
The division has a Corporate
profile, and develops appropriate
Research Department that is
measures to respond to issues. In
responsible for developing rating
To control bankwide credit risk,
we have established a Credit
●
●
●
models and conducting surveys of
management, credit extension
industries as well as trends among
limits are set for each credit rating.
major companies. This department
Decisions to extend large amounts
strategies and rules that form the
also provides opinions from a
of credit that exceed the scope of
core of credit risk management at
professional perspective in
authority of credit divisions
Tokai Bank. In addition to
conection with credit approval and
require the approval of the director
delineating basic lending principles
ratings for customers who are
in charge of lending and the
and the laws and regulations with
important in terms of credit
Investment and Credit Conference.
which we must comply, our credit
Credit Policy
Our credit policy determines the
management.
policy incorporates global
Credit Reviews
Reporting to Management
The Credit Planning Division
standards in areas such as portfolio
Tokai Bank’s internal credit
management and setting credit
rating system, including decision
compiles and analyzes information
making concerning credit limits, is
on Tokai Bank’s overall credit risk
critical to our credit risk
profile, and the results are reported
management system. Moreover,
to the Executive Committee on a
accurate execution of the self-
monthly basis after the reviews by
assessment system is essential to
the Risk Management Committee.
our ability to maintain a sound
In addition, a summary is given to
financial position through
the Board of Directors, while key
additions to the reserve for
issues for business execution are
possible loan losses that reflect the
reported to the Non-Board
degree of deterioration in the
Member Executive Directors’
quality of loan assets. We have
Committee.
therefore established a Credit
limits that control the
concentration of credit with
specific borrowers.
Gist of Credit Policy
Basic lending principles
Compliance with applicable laws and
regulations
● Matters to be considered in lending
● Authority and independence of credit
approval
● Credit rating system and rating reviews
● Credit limit system
● Profitability standards and policies
governing relationships
● Portfolio management
●
●
Review Division that is
Authority for Credit Extension at
Companies
For approval of specific credits,
Tokai Bank conducts specialized
and timely reviews through the
credit divisions established within
each company (Credit Divisions IIV and the International Credit
Division), in order to accurately
meet the needs of each customer.
To ensure effective credit risk
independent of the activities of
each company. This division
Credit Rating System
To ensure objectivity and
assigns credit ratings for each
consistency in the management of
customer and conducts an accurate
credit risk, Tokai Bank assigns
self-assessment of assets, and also
credit ratings to all borrowers
examines the effectiveness of
other than those in the public
systems for these functions.
sector and individual loan clients.
We focus on quantitative
evaluation to maintain objectivity
in rating procedures. For the
●
●
●
procedures and computer support
for lending decisions. These
Fields of Application
systems are important not only for
Self-assessments
Implemented based on credit ratings
Credit limits
Set permissible amounts for each credit rating
Problem loan administration
Use credit ratings for automatic screening and elimination
of special watch borrowers
Collateral evaluation cycle
Implement short-cycle evaluations for very low ratings
Coverage standard guidelines
Set coverage ratio standards for each rating
Credit limit system
Set credit limits for corporate and group borrowers at each
credit rating
improving the Bank’s risk
1
2
3
4
5
6
7
8
9
10A
10B
11
12A
12B
Prime A
Prime B
Prime C
Good
Satisfactory
Fair
Acceptable
Borderline watch
Watch A
Watch B
Special watch
Bankruptcy risk
De facto bankruptcy
Formal bankruptcy
profitability, but also for boosting
the Bank’s competitiveness
Credit Ratings
Rating
management and strengthening
through improved service to
customers. In addition to rating
models for domestic corporations,
Self-assessment
Borrower category
Classification
recent development themes are
outlined in the chart on page 41.
COUNTRY RISK
Normal
I (nonclassified)
Country risk includes political
risk and cross-border risk as well as
the risk of economic downturns in
specific countries. Political risk
I
Watch
II
Bankruptcy risk
De facto bankruptcy
Formal bankruptcy
refers to the possibility that the
Bank may be unable to recover
III
IV
loans due to the nationalization of
borrowers or because of the effects
of war, rioting, civil disturbances
corporate borrowers that
constitute a majority of our
Measurement of Credit Risk
or other incidents. Cross-border
Centered on credit ratings,
risk refers to the possibility that
domestic lending business, we use
credit-related data are quantified
borrowers will be unable to
a highly reliable statistical rating
and analyzed by our credit risk
convert local currency into the
model based on insolvency data of
management system and deployed
loan currency on the maturity date
the Bank’s customers.
in management administration
(convertibility risk), and the
from the perspective of portfolio
possibility that the borrower may
management.
be unable to transfer funds to the
Credit ratings are used in credit
extension decisions and in
individual credit administration
activities such as those below. They
also serve as the basis for a
management system based on
credit metrics.
Credit Risk Management
Procedures and Credit-Related
Systems
Tokai Bank is developing
sophisticated risk management
payment location in the loan
currency on the maturity date due
to factors such as government
restrictions on fund transfers
(transfer risk).
●
●
●
Administrative Framework
Total Risk
Equity capital
Operating capital
Risk Concentration
Credit line basis
Credit limit system
Capital-at-risk basis
Concentration by industry
Purpose
Capital-at-risk (Credit + Market)
Keep bankwide capital-at-risk within the scope of equity capital
Set maximum amount for credit concentration
+ Loan concentration by business group
Monitor credit risk concentration on calculated risk basis
RAROC
= Risk-adjusted earnings
÷ Operating capital (Capital-at-risk)
Evaluate risk-adjusted return on equity
Economic Value Added
= Risk-adjusted earnings
— Cost of capital
Evaluate surplus profit after deducting cost of capital
Optimization
Profitability standards
+ Fundamental transaction policy
Scenario Analysis
Compilation of data on diverse preconditions and Monte Carlo simulations
Profitability
Reallocate assets toward credit structure with the optimal risk/return ratio
Analyze the effects of irregular occurrences and past trends
Evaluation of low-volume business loans is computer supported to speed the decision process. This helps Tokai Bank
meet the fund needs of customers such as medium- and small-sized businesses and sole proprietors.
Credit Risk Management
System
This system is designed to measure bankwide credit risk exposure, based on a data warehouse for all credit-related data,
including domestic and overseas, on- and off-balance sheet, and lending and market transactions. Basic functions came
on-line in April 1998, and all other functions were in operation by January 1999. The system can perform both Monte
Carlo simulations and analytic evaluations to estimate the expected loss and maximum possible loss in the Bank’s credit
portfolio. It can also calculate the marginal increase in expected losses on the overall portfolio of loans to individual
customers. Moreover, it can perform simulations of changes in risk factors based on hypothetical conditions.
Electronic Data Exchange
and Approval Systems
Tokai Bank has developed and given all branches access to an electronic data exchange and approval system for use in
credit consultation. This system enables relevant parties to share and use customer-related data to improve the speed
and efficiency of the credit approval process.
Glossary of Terms
Auto-Scoring Model
Credit risk
The possibility that the Bank will incur a loss due to a counterparty’s inability to meet the original
contracted interest and principal payments because of bankruptcy, etc.
Expected loss
The predictable loss on uncollectible loans based on bankruptcy statistics. Statistical benchmarks are used
to gauge the appropriate level for the general reserve for possible loan losses.
Unexpected loss
Losses on uncollectible loans exceeding the predictable amount. Measured by standard deviation of the
possibility of actual losses deviating from forecast losses.
Maximum loss
The maximum expected loss/The ‘worst case scenario’ was a 99% probability (the possibility of losses
exceeding maximum expected losses is 1%).
Risk-adjusted earnings
Gross loan profit minus loan expenses minus expected loss. Equivalent to loan profit after elimination of
loan loss reserve cost.
Capital-at-risk
Maximum expected loss minus expected loss. This represents the amount of capital that would be set aside in the
worst-case scenario to cover the portion of loan losses not covered by the general loan loss reserve.
Latent loss, namely the concept of ‘risk’ itself, is used to determine the existence and scale of risk.
Operating capital
The amount of capital allocated to each company, and the maximum limit on risk-based capital that can
be used by each company.
Cost of capital
The level of profit necessary to achieve the Bank’s ROE target.
RAROC
Risk-Adjusted Return on Capital (risk-adjusted earnings/capital-at-risk)
Economic Value Added
A measure of the added value generated by the Bank’s lending business, defined as surplus after
deducting cost of capital.
Profitability standards
The profit level set according to the Bank’s lending strategy, using the standard of loan costs + loan loss
reserve costs (expected loss) + cost of capital.
Fundamental transaction
policy
The lending policy set by the Bank, taking into account not only borrower credit ratings and profit
criteria but also the borrower’s overall business relationship with the Bank.
●
●
●
In emerging countries, we
rating and on the size of each
To avoid the deterioration of
overseas loan assets in cases where
country’s economy, we calculate a
continue to regularly monitor key
country risk becomes material,
fixed ratio applicable to each
economic indicators after
Tokai Bank has implemented the
country, and multiply the Bank’s
extending credit. We have created a
measures outlined below.
capital by this ratio to determine
system for taking prompt measures
the limits for extension of credit to
in the event signs of economic
qualitative analyses for each
each country; the higher the rating
deterioriation appear.
country to assign national ratings,
and the larger the economy, the
using both proprietary
higher the credit limit. Within the
deteriorates below a certain level
information collected at overseas
scope of the credit limit, we also set
and causes concerns about
offices and information from other
country limits, and the amount of
recoverability under the original
institutions. Based on the risk ratio
individual loans is kept within this
lending terms, we provide a reserve
corresponding to the national
country limit.
for specific overseas loan losses to
We conduct quantitative and
Furthermore, if country risk
Market Risk Management
Global Risk Management System
Overview of Risk Management System
Administration Management
Executive Committee Resolutions
Meeting of Risk Management Committee
● Sets maximum bankwide market risk
● Allocates risk to each division
Reporting
Risk Management Committee Secretariat: Risk Management Division
Allocation
Risk Control Division
Risk Management Division
Divisions Interfacing Markets
Global Trading Div.
Treasury & Securities Div. ALM Div.
Operations Policy
Meeting
Allocation
Overseas Regional Main Branches
(New York, London, Hong Kong, Singapore)
Overseas Branches and Subsidiaries
Monitoring
Setting of Operating
Policy
Risk Committee, etc.
1. The Executive Committee approves maximum bankwide risk and allocates to each division.
2. Information on market risk and profit/loss is followed daily by the Risk Management Division, which is independent of the
divisions interfacing the markets and reports directly to top management.
●
●
●
make appropriate preparations in
raised the importance of effective
know-how from the United States
the event country risk materializes.
control of market risk in
and Europe in setting limits for
Countries covered by this reserve
maintaining stable earnings.
risk exposure, managing loss limits
and measuring risk using Value at
at the end of March 1999 were
Indonesia, Pakistan, Algeria and
Ecuador.
Market Risk Management System
Tokai Bank calculates maximum
Risk (VAR) analysis. VAR estimates
the maximum possible loss due to
risk exposure in market
market changes using statistical
balance of loans to Asian countries
transactions by taking into account
means.
stood at ¥636.3 billion. This total
the Bank’s capital and the
VAR Standards for Tokai Bank
included loans of ¥193.0 billion to
risk/return standards shown by
Calculation method:
Historical simulation
countries receiving IMF support
RAROC. The amount is approved
Confidence interval:
99%
— Thailand, Korea and Indonesia.
by the Executive Committee and
Holding period:
One day and ten days
Loans under risk monitor in Asian
allocated to each division.
Observation period:
Two years
countries are ¥29.0 billion.
Furthermore, the Risk
Management Division, an
MARKET RISK
Market risk is the possibility of
independent risk management
section, keeps a daily watch on the
losses arising as a result of changes
profit or loss situation and
in market factors such as interest
conditions that affect market risk
rates, prices of marketable
bankwide, both for the Bank itself
securities and foreign exchange
and local subsidiaries. The division
rates, resulting in changes in the
reports directly to top
value of the Bank’s assets,
management.
including off-balance-sheet assets.
In addition to the growing
complexity and diversity of market
Market Risk Management
Procedures
Tokai Bank employs rigorous
Risk Management
Profile for Fiscal Year Ended
March 1999
VAR and Profit and Loss
Tokai Bank’s VAR profile in
trading operations for the fiscal
year ended March 1999 is shown in
the table on the next page.
As shown in the pie chart on the
next page, interest rate risk was the
largest component of overall risk.
VAR is an estimate of the
maximum expected loss that
would occur at a statistical
operations, the financial
market risk management
probability of 1 percent if, for
environment both in Japan and
techniques based on advanced
example, an equity or foreign
overseas has become increasingly
uncertain. Recent indications of
The Historical Simulation Method
this include turmoil in the
The historical simulation method was developed through joint research by Tokai Bank Europe and the
London Business School. Its main features are as follows:
economies of the emerging
• Since VAR uses simulations based on data from actual past market changes, it provides a better
estimate of current market trends than the variance/covariance method used by many other financial
institutions, which assumes a normal distribution for changes in market risk factors.
• Profit and loss simulations based on various market change data are carried out in the process of
calculating VAR. This allows concrete determination of the market scenarios that would have a major
impact on the Bank’s current portfolio.
• The use of simulations employing a market valuation model for options enables a better estimate of
the nonlinear risks associated with options transactions.
markets, failures among major U.S.
hedge funds, and the spike in longterm interest rates in Japan.
Factors such as these have further
●
●
●
exchange instrument were held
continuously for one day and the
Chart 1: Daily Value at Risk for the Fiscal Year Ended March 31, 1999
interest rate or market conditions
(yen in millions)
turned unfavorable. The VAR
3,000
4,000
2,000
amount does not necessarily
VAR
1,000
represent the loss that would
0
actually occur.
-1,000
Daily tradingrelated revenues
VAR
-2,000
VAR for the fiscal year ended
-3,000
March 1999, as shown in the line
-4,000
4/1
graph in Chart 1, fluctuated within
4/22
5/18
6/8
6/29
7/21
8/11
9/1
9/24 10/15 11/6 11/30 12/18 1/13
2/4
2/26 3/19
Month / Day
Chart 2: Back Testing
a range of ¥500 million to ¥3.4
(yen in millions)
billion. The bar graph in the same
3,500
3,000
market valuation gains and losses
2,500
Absolute Earnings Risk
chart shows that actual day-to-day
moved within a range of ¥0 to ¥3.0
billion.
2,000
1,500
1,000
500
(¥ billion/Confidence interval: 99%)
Holding period:
1 day
Holding period:
10 days
3.4
0.5
1.3
6.8
1.0
2.8
Maximum VAR
Minimum VAR
Average VAR
0
0
500
1,000
Back Testing
2,500
3,000
3,500
4,000
(yen in millions)
fiscal year.
Under BIS rules, risk calculation
evaluate the accuracy of risk
models in which such a situation
calculations by comparing the VAR
occurs four times or less are
with actual gains and losses. The
considered acceptable. This
dots shown in Chart 2 show daily
confirms that Tokai Bank’s risk
Trading Operations by Risk Factor (As of March 31, 1999)
Total: ¥747 million (Holding period 1 day; consolidated basis)
value at risk and the
calculation model is a reasonably
fluctuations in market
accurate measure of market risk.
valuation gains and
losses. Dots above the
Currency risk 22%
Interest rate risk 45%
2,000
VAR
Back testing is the model used to
Stock risk 33%
1,500
Stress Testing
diagonal median line
As described above, VAR is the
signify gains or losses
maximum expected loss estimated
that exceeded
at a statistical probability of
projected VAR, a
1 percent. However, this is an
situation that occurred
estimated value and we cannot
four times during the
dismiss the possibility that sudden,
●
●
●
shares as well, and sets maximum
Stress test profile (Domestic trading; holding period 10 days)
VAR
¥0.8 billion
Stress value
¥7.1 billion
abnormal movements in market
Assumes reverse market movements (interest
rates and stock price appreciation) on the
magnitude of Black Monday
ALM aims to maintain an
limits for risk exposure.
Note: “Cross-shareholdings” refers to stock
held in companies with which the Bank has
close business relations. These shares are
typically held for the long term and are treated
separately from shares held for trading and
investment purposes.
COMPREHENSIVE RISK
MANAGEMENT
factors could lead to significant
appropriate balance between bank-
losses that are not predictable by
wide assets and liabilities such as
market, credit and cross-
VAR calculations. Tokai Bank
deposits, market funding and loans
shareholding risk provides a
therefore supplements VAR with
using interest rate projections and
common measure for gauging the
stress testing. Stress testing uses
assure that stable earnings are
risks in these different areas of
market data from the past 10 years
supported. To ensure optimal
business. Starting from the fiscal
and hypothetical scenarios to
management of increasingly
year ending March 2000, Tokai
measure potential losses in the
complex market risk, we are
Bank is implementing
event of extreme market
further raising the efficiency and
comprehensive management of
movements.
effectiveness of our ALM
these risks. By controlling the total
techniques.
volume of these risks within the
The use of both VAR and stress
testing allows Tokai Bank to ensure
that losses under any conditions
Cross-Shareholdings
stay within the scope of the Bank’s
Besides market and credit risk,
equity capital. These methods thus
there is the risk of price changes in
serve as constant safety checks.
crossheld shares (see note), which
is also quantifiable. Because of the
Asset-Liability Management
(ALM)
Tokai Bank has concentrated
interest rate risks associated with
areas such as deposits and loans in
the ALM Division since April 1996.
Using a centrally managed spread
banking system, we have
successfully achieved effective and
efficient control of interest rate
risk.
large balance of our crossshareholdings, we cannot overlook
the risk of changes of their prices.
With the planned shift to mark-to-
The use of VAR to manage
scope of the Bank’s equity capital,
we aim to strengthen risk
management and enhance sound
and stable management.
CREDIT RISK
MANAGEMENT IN OFFBALANCE-SHEET
TRANSACTIONS
Off-balance-sheet transactions,
market accounting of cross-
including derivatives transactions,
shareholdings, the task of
are an integral part of the banking
managing this risk is becoming
business. As such transactions
more important. Tokai Bank is
increase, precise measurement of
therefore using VAR to calculate
the risks in each transaction and
the risk amount for crossheld
rigorous management of these
●
●
●
risks as a collective whole present
the limit. The overall replacement
management of funding
an important theme in
cost (credit amount equivalent) is
operations. As a result, smooth
management of a bank.
gauged periodically and
and efficient operations have been
incorporated in the management
maintained in procuring the
of credit risk.
necessary funds in yen and foreign
Derivative Products and Forward
Foreign Exchange Transactions
As is the case with stocks and
bonds, derivative products and
forward foreign exchange
transactions carry the risk of
unrealized losses arising from
changes in interest rates, stock
prices or foreign exchange rates
(market risk). In addition to these,
there is also the credit risk that
assets might become unrecoverable
due to the bankruptcy of
counterparties.
In the event of a counterparty’s
bankruptcy, unlike in the case of
lending, the loss is linked not to
the contracted amount (the
notional amount) itself, but is
equivalent to the replacement cost
— in other words, the amount of
capital required to replace the
same transaction with another
counterparty.
As in lending operations, credit
risk for an individual transaction
counterparty is managed by the
division in charge of credit
decision, which sets limits on
transaction amounts for each
counterparty and ensures that each
type of transaction does not exceed
currencies, even amid the
Credit-Related Transactions
Off-balance-sheet transactions
also include credit commitments
uncertainties in the financial
system that have prevailed over the
past two years.
and guarantees. In these
transactions, unlike derivatives and
forward foreign exchange
Risk Management System
The ALM Division is responsible
transactions, in the event that the
for raising funds in yen currency,
credit risk of the counterparty
while the Treasury & Securities
becomes prominent, the
Division is in charge of funding in
maximum amount at risk is the
foreign currencies. As such, these
contract amount. As with loans,
divisions shoulder responsibility
we control credit risk by setting
for liquidity risk, with the Risk
limits for the transaction amount
Management Division supervising
for each counterparty.
the entire operation.
Action plans are also prepared
LIQUIDITY RISK
MANAGEMENT
Liquidity risk is the risk of
according to the prevailing market
environment so that marketable
assets can be readied for
tightening in the bank’s fund
immediate conversion to cash.
management due to difficulty in
These and other measures ensure
procuring funds through markets
that the Bank is prepared to cope
as a result of an erosion in the
with sudden changes in the
credibility of banks, including
environment.
Tokai Bank.
Tokai Bank has always
emphasized stable fund
Risk Management Procedures
By calculating the necessary
procurement as a basic policy. The
funding requirements, relevant
Risk Management Division leads
divisions and the Risk
the coordinated efforts among
Management Division monitor on
related divisions to ensure proper
a daily basis the condition of funds
●
and status of compliance with rules
relating to funds (specifying the
●
uninterrupted operation.
On the other hand, contingency
●
LEGAL RISK
In the Tokai Bank Charter on
plans are also in place to handle
Ethics and Code of Conduct,
emergencies arising from system
instituted in September 1998, the
on a regular basis by the Risk
failures and for restoration of
Bank clarified compliance with
Management Committee. The
failed equipment. Training sessions
laws, regulations and rules as a
committee deliberates on problem
are held regularly for employees to
fundamental management policy,
countermeasures and updates
keep them prepared to handle
setting forth the principle that the
management.
emergencies.
Bank complies with the laws and
SYSTEM RISK
Assurance of Data Safety
upper limit for necessary funds).
Liquidity risk is also monitored
Computer systems are
To harness the increasing risk of
indispensable for financial
unauthorized access through
institutions, and the effect on
networks, we have implemented
society due to system failures is
measures to isolate the Bank’s
ever increasing. For this reason,
internal networks from external
Tokai Bank devotes its fullest
networks such as the Internet.
efforts to developing various
Important data are encoded for
measures to ensure the safe, stable
storage, for example, to assure the
operation of systems.
highest level of security.
Dual Computer and Backup
System
Improved System of Internal
Auditing
A dual system has been adopted
The internal auditing of system
regulations of society, conducting
its business fairly and in good
faith, and shall not be found
lacking in its ethical and
compliance standards.
Laws and regulations provide the
minimum rules for banks in
conducting their business, and
compliance thereto is a
prerequisite for gaining the
confidence of customers as well as
society. Furthermore, conducting
our business in accordance with
the relevant laws and regulations
for computers, networks and other
divisions is undertaken by the
helps prevent unnecessary losses
key equipment, providing a
Audit Division, which is an
which the Bank might otherwise
backup system which ensures
independent organization within
suffer. Proper management of legal
normal operation by activating the
the Bank, and the Systems
risks serves as the foundation for
standby equipment when system
Administration Department. The
Tokai Bank to manage its business
failures occur.
operational control of computer
soundly, and to fulfill the social
systems and the reliability and
mission with which it has been
the online center fail due to an
confidentiality of systems are
entrusted.
earthquake or other disaster, the
checked and audited on a regular
system can be switched to the
basis to eliminate system risk.
Should the computer system in
To that end, we have created a
system that permits the execution
computer system installed in
of banking operations without
backup online centers to maintain
violating laws or regulations. In
●
●
●
preparing in-house procedures, the
presence of legal problems. While
information on banking
Bank ensures that the applicable
coping with problems that have
operations, including
laws and regulations are reflected.
materialized such as lawsuits is also
administrative procedures, on an
As for various rules that
a task of the Legal Department, the
internal online database.
accompany banking operations, as
Bank believes that taking proactive
Employees can thus access the
well as regulations on insider
measures to prevent problems is of
most up-to-date information
transactions, we have published
the utmost importance.
whenever they need it. Moreover,
we are relieving each branch of
manuals and distributed them to
all Tokai Bank employees to ensure
compliance.
OPERATIONAL RISK
The changing financial
overall internal back-office
administration by centralizing it at
environment, surge in volume of
a specialist administration section
legal division into a specialized
administrative processes and
through a “backless” operation.
department for managing legal
diversification of banking products
Through the above measures, we
risk, establishing the Legal
have led to increased operational
are raising the efficiency of internal
Department within the
risk. To raise the efficiency of
administrative procedures at each
Compliance Division in April
administrative processes and
branch and enhancing the mutual
1999. To preserve its specialization
prevent irregularities, we have
verification system, thereby
and objectivity, the Legal
assigned operational supervisors to
building a framework that can
Department maintains close
each branch, renovated systems
respond more swiftly to changes in
contact with legal advisors in
and fortified administrative
the operating environment.
respect to its activities. The Legal
guidelines and the training
Department verifies legal risks
structure.
The Bank has reorganized its
Audit System
Each branch manager is
As a precautionary measure
consultations by respective
responsible for carrying out
against irregularities and in order
divisions and branches, and
internal audits whenever necessary.
to encourage balanced
advises them on concrete measures
In addition, the Audit Division
management within branches, the
to address the issues. The
performs comprehensive audits at
Audit Division visits each branch,
department also checks new
each branch. This system enables
including those overseas, and each
products for marketability, as well
us to proactively prevent
division at headquarters at least
as important agreements the Bank
irregularities and deal swiftly with
once a year. During these visits, the
intends to bind. Furthermore, a
any problems that do arise.
Audit Division carries out an audit
upon request for legal
system is in place for the Legal
With the aim of delegating more
of cash instruments, such as cash
Department to check important
flexible administrative
and marketable securities, checks
matters to be resolved by the Board
management to each branch, from
for discrepancies in the various
of Directors in advance for the
April 1998 we have been placing
accounts, and inspects each type of
●
●
●
custodial and contract matter. In
addition, the Audit Division
carries out multifaceted checks on
the condition of branch
management in various areas such
as compliance procedures and
provides guidance.
We are also strengthening the
Branch Administration Center,
which conducts audits of small
branches and spot audits of new
branches.
In our overseas-related
operations, we are taking
countermeasures against various
risks by conducting spot checks
through our Overseas Audit
Department and by bolstering our
internal auditing functions. In the
systems related area, we are
making every effort to strengthen
our audit functions by conducting
audits concerning the Bank’s
measures for the Year 2000
Problem and the outsourcing of
work in the Systems Division.
Compliance System
●
Because of the sizable problem
loans incurred during the asset
bubble economy, as well as a series
of scandals, banks in Japan have
come under harsh public criticism.
Amid these conditions, banks must
reaffirm their civic value and social
responsibility and work to regain
the trust of society, customers and
stockholders.
Meanwhile, the Big Bang
reforms are revolutionizing Japan's
financial markets, making them
more open, transparent and
international. In this environment,
banks will need to go beyond
fulfilling their traditional civic role
and social responsibility in
becoming law-abiding corporate
citizens following the highest
ethical standards.
Tokai Bank has a Compliance
Committee, chaired by the
president, to deal with issues such
as building internal compliance
systems and setting basic
guidelines to ensure the
●
contracts with clients, marketing
policies for new businesses and
new products, as well as other
issues
• Compiled and distributed a
Guide to Customer Relations
Rules containing the appropriate
mind-set, basic knowledge and
checkpoints for business
promotion methods of account
representatives
• Worked to ensure compliance
with regulations utilizing every
opportunity such as training
●
of our customers, we aim to foster
growth and prosperity in
partnership with the communities
we serve” — is supported by four
basic principles: a customer-first
philosophy, people-oriented
management, transparent and fair
management, and innovative
management. The Charter on
Ethics and Code of Conduct is an
extension of the principle of
• The Audit Division checks legal
compliance conditions at each
branch during internal audits
transparent and fair management,
• Clarified prohibited activities
and penalties in effect following
revisions to the employee reward
and penalty system
among all employees of the Bank’s
• Assigned individuals responsible
for compliance at overseas bases
and internal auditors in the
Audit Division to strengthen
post-audit checks
tenets, the committee also
• Instituted a business audit
system using outside auditors to
recheck internal inspections and
audits at overseas branches
importance of compliance for the
• Implemented audits by outside
auditors to check the
appropriateness of our selfassessments, an important factor
in determining credit risk.
into the Compliance Division to
and is intended to raise awareness
civic role, social mission and
ethics. In accordance with these
established rules concerning
relationships with customers.
Reflecting the increasing
Bank’s management, in April 1999
we reorganized the Legal Division
further strengthen compliance
functions. This division is in
charge of proposing policies and
providing guidance and
compliance of all employees with
In September 1998, to further
relevant laws and regulations. The
instill compliance in the corporate
supervision for compliance-related
Committee has implemented the
culture, the Compliance
issues.
following series of measures:
Committee prepared the Tokai
• Instituted a system for verifying
in advance legal risks regarding
the overall decision making of
management and any major
measures taken by the head
office and each division,
Bank Charter on Ethics and Code
of Conduct, and distributed it to
all employees. The Bank’s
philosophy — “Earning the trust
FINANCIAL SECTION
SIX-YEAR FINANCIAL SUMMARY ............................................... 52
FINANCIAL REVIEW .................................................................... 53
CONSOLIDATED FINANCIAL STATEMENTS ............................... 58
CONSOLIDATED BALANCE SHEETS ............................................... 58
CONSOLIDATED STATEMENTS OF OPERATIONS ............................ 59
CONSOLIDATED STATEMENTS OF EARNED SURPLUS .................... 59
CONSOLIDATED STATEMENTS OF CASH FLOWS ............................ 60
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS .................... 61
ADDITIONAL NON-CONSOLIDATED
FINANCIAL INFORMATION.................................................... 78
SIX-YEAR FINANCIAL SUMMARY
The Tokai Bank, Limited and Consolidated Subsidiaries
Years ended March 31
(yen millions except per share data)
STATEMENTS OF OPERATIONS DATA FOR
THE FISCAL YEAR
1999
1998
1997
1996
1995
1994
Total Income . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,343,238
¥ 1,563,184
¥ 1,786,743
¥ 1,968,388
¥ 1,523,370
¥ 1,950,694
Interest Income . . . . . . . . . . . . . . . . . . . . .
959,239
1,021,732
1,366,362
1,390,235
1,309,492
1,443,141
Fees and Commissions . . . . . . . . . . . . . . .
65,476
64,187
62,977
60,045
55,688
55,884
Trading Profits . . . . . . . . . . . . . . . . . . . . . .
18,560
90,719
—
—
—
—
Other Operating Income . . . . . . . . . . . . . .
130,603
116,085
153,675
195,854
79,465
120,296
Other Income . . . . . . . . . . . . . . . . . . . . . . .
169,360
270,461
203,729
322,253
78,726
331,373
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,711,858
¥ 1,546,854
¥ 1,745,572
¥ 2,215,623
¥ 1,499,551
¥ 1,901,957
Interest Expenses . . . . . . . . . . . . . . . . . . . .
637,447
707,180
1,049,498
1,021,346
984,343
1,104,237
Fees and Commissions . . . . . . . . . . . . . . .
11,214
19,875
10,800
16,601
17,064
15,540
Trading Losses . . . . . . . . . . . . . . . . . . . . . .
4,042
72,047
—
—
—
—
Other Operating Expenses . . . . . . . . . . . .
74,755
30,079
87,498
127,451
57,129
53,136
General and Administrative Expenses . .
273,287
288,858
285,550
264,882
251,326
263,011
Provision for Possible Loan Losses . . . . .
150,668
306,542
39,553
533,029
46,703
26,986
Other Expenses . . . . . . . . . . . . . . . . . . . . . .
560,445
122,273
272,673
252,314
142,985
439,047
Income (Loss) before Income
Taxes and Minority Interest . . . . . . . . . . . .
Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . .
(368,620)
¥
(286,763)
16,330
¥
14,257
41,171
¥
16,800
(247,235)
¥
(134,605)
23,819
¥
4,624
48,737
¥
33,894
BALANCE SHEET DATA AT FISCAL YEAR-END
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥31,839,710
¥34,920,728
¥35,400,298
¥33,134,884
¥32,465,785
¥33,657,389
115,627
Call Loans . . . . . . . . . . . . . . . . . . . . . . . . . . .
622,698
371,531
98,641
195,295
329,998
Trading Assets . . . . . . . . . . . . . . . . . . . . . . .
1,252,664
1,943,701
—
—
—
—
Trading Account Securities . . . . . . . . . . .
—
—
1,555,970
1,033,837
956,037
1,153,200
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
4,574,963
4,279,644
4,629,023
4,282,067
3,848,231
4,007,567
Loans and Bills Discounted . . . . . . . . . . . .
18,869,157
20,504,164
20,635,319
20,137,064
19,796,083
20,166,715
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . .
¥30,141,150
¥33,720,916
¥34,338,942
¥32,175,421
¥31,352,544
¥32,532,782
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20,842,935
22,051,406
22,791,499
22,417,533
22,268,179
23,015,908
Trading Liabilities . . . . . . . . . . . . . . . . . . . .
637,564
1,131,428
—
—
—
—
Reserve for Possible Loan Losses . . . . . .
315,611
804,298
731,186
789,704
315,976
296,370
Minority Interests . . . . . . . . . . . . . . . . . . . . . .
¥
134,130
Total Stockholders’ Equity . . . . . . . . . . . . . .
¥ 1,564,430
Capital Stock . . . . . . . . . . . . . . . . . . . . . . . .
722,969
¥
134,025
¥
—
¥
¥ 1,065,787
¥ 1,061,356
¥
361,972
361,972
—
¥
—
¥
—
959,463
¥ 1,113,241
¥ 1,124,607
311,972
311,931
311,931
PER SHARE DATA FOR THE FISCAL YEAR
Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . .
Stockholders’ Equity . . . . . . . . . . . . . . . . . . .
¥
(143.01)
383.96
¥
5.33
475.98
¥
6.59
473.80
¥
(66.34)
472.86
¥
2.28
548.67
¥
16.70
554.27
FINANCIAL REVIEW
Expanded Scope of Consolidation
As per changes in the regulations governing the scope of consolidation of subsidiaries
and affiliates, the results of an additional 17 subsidiaries and 12 affiliates are included.
Major companies coming under the expanded scope of consolidation are Central
Systems Co., Ltd., The Million Credit Co., Ltd. and Bangkok First Tokai Company Ltd.
Analysis of Consolidated Statements of Operations
Consolidated total income for the fiscal year ended March 1999 decreased 14.0 percent
to ¥1,343.2 billion (US$11,143 million). Total expenses increased 10.7 percent to ¥1,711.9
billion (US$14,200 million). As a result, Tokai Bank recorded a loss before income taxes and
minority interest of ¥368.6 billion (US$3,058 million).
Income Summary
(yen billions)
Net interest income
Net fees & commissions
Net trading profits
Net other operating income
Subtotal (income from business activities)
General and administrative expenses
Provision for possible loan losses
Net other (expenses) income
Loss from sales of problem loans to CCPC*
Loss from sales of loans reserved and
overseas loans*
Loan charge-offs*
Waiver of claims*
Net (loss) income
(U.S. dollars millions)
1999
1998
1999
¥321.8
54.3
14.5
55.8
446.4
273.3
150.7
(391.1)
27.1
¥314.6
44.3
18.7
86.0
463.5
288.9
306.5
147.5
9.1
$2,669
450
120
463
3,703
2,267
1,250
(3,244)
225
32.7
211.7
179.4
(286.8)
10.1
19.6
40.3
14.3
271
1,756
1,488
(2,379)
* Figure for parent company only
Net interest income increased 2.3 percent to ¥321.8 billion (US$2,669 million). Net fees
and commissions increased 22.5 percent to ¥54.3 billion (US$450 million). Net trading
profits decreased 22.2 percent to ¥14.5 billion (US$120 million). Net other operating income
decreased 35.1 percent to ¥55.8 billion (US$463 million), due primarily to reduced profit on
sales of bonds.
Income from business activities for the fiscal year ended March 1999 decreased 3.7
percent to ¥446.4 billion (US$3,703 million). General and administrative expenses decreased
5.4 percent to ¥273.3 billion (US$2,267 million) due to the Bank’s continued efforts to
reduce these expenses.
General and Administrative Expenses (yen billions)
Income from Business Activities (yen billions)
0
100
200
300
400
0
500
1999
1999
1998
1998
1997
1997
1996
1996
1995
1995
60
120
180
240
300
Moreover, the Bank set aside reserves as a measure to cope with the possible future
deterioration of asset quality resulting from the prolonged economic recession. In addition, the final disposal of problem loans was rigorously implemented. Also, stock related
profits of the parent company decreased 58.2 percent to 64.8 billion (US$537 million). Net
loss totaled ¥286.8 billion (US$2,379 million), and net loss per share totaled ¥143.01.
Analysis of Consolidated Balance Sheets
Assets
Total assets at March 31, 1999 decreased 8.8 percent to ¥31,839.7 billion (US$264,120 million) due to decreases in loans and bills discounted and other assets. The balance of loans
and bills discounted stood at ¥18,869.2 billion (US$156,526 million), down 8.0 percent from
a year earlier because of sales of problem loans, such as through sales of loans reserved,
and the contraction in loans overseas with low profitability as part of the Bank’s overall
asset allocation policy.
Loans and Bills Discounted (yen billions)
0
5,000
10,000
15,000
20,000
25,000
1999
1998
1997
1996
1995
Liabilities
Total liabilities at March 31, 1999 decreased 11.0 percent to ¥30,141.2 billion (US$250,030
million) due mainly to a decrease in deposits. The balance of deposits decreased 5.5 percent to ¥20,842.9 billion (US$172,899 million)‚ with reasons for the drop including a reduction in accepting overseas deposits concurrent with reduction in overseas assets. The
reserve for possible loan losses decreased 60.8 percent to ¥315.6 billion (US$2,618 million),
for reasons including the use of partial direct charge-offs beginning in the past fiscal year
as per revised accounting standards for the banking industry. Minority interests of ¥134.1
billion (US$1,113 million), formerly included in “Other liabilities,” are now reported separately in the consolidated financial statements as per newly adopted accounting standards.
Problem Loans and Reserves
The scope of consolidation has been revised from the standard based on the ownership concept used hereto to one based on the control concept or impact concept, in
order to reflect more appropriately the actual situation of the corporate group in the consolidated financial statements.
Charge-Offs and Reserves
The Bank applies the “The Viewpoint on the Write-offs and Allowances in Association
with the Capital Injection” issued by the FSA to its consolidated financial statements.
Reserve for Possible Loan Losses (yen billions)
0
160
320
480
640
800
1999
1998
1997
1996
1995
The reserve for possible loan losses in the fiscal year ended March 1999 decreased as a
result of the implementation of partial direct charge-offs. Beginning from the fiscal year
ended March 1999, a specific reserve is provided for loans categorized as Classification IV
under the Bank’s self-assessment, even in cases not qualified as losses under tax laws. For
these loans, the Bank implements partial direct charge-offs, thereby reducing both the
loan balance and corresponding reserve amounts.
Problem Loans
Whereas problem loan disclosure for loans under risk monitor is based on individual
loans, such as the situation for payment in arrears of interest and principal, disclosure
under the new standards differs in that it is the Bank’s assessment of its loan assets (total
claims) corresponding to each borrower category.
Loans Under Risk Monitor (After Partial Direct Charge-Offs)
As of March 31
(yen billions)
1999
Loans to borrowers in legal bankruptcy . . . . . . . . . . . . . .
Overdue loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans overdue for at least 3 months . . . . . . . . . . . . . . . . .
Loans with concessions in terms . . . . . . . . . . . . . . . . . . . .
¥ 76.6
257.1
64.5
93.8
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥492.0
Problem Loans (After Partial Direct Charge-Offs) Under New Disclosure Standards
(Financial Reconstruction Law, Article 7)
As of March 31
(yen billions)
1999
Bankrupt and quasi-bankrupt claims . . . . . . . . . . . . . . . . . ¥
Doubtful claims. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Substandard claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Normal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
284.6
411.0
142.5
20,187.5
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥21,025.6
The proportion of problem loans within total claims under the new standards is 3.99
percent, which the Bank’s management considers a level much closer to the norm.
Total Stockholders’ Equity and Capital Adequacy
Stockholders’ equity increased 46.8 percent to ¥1,564.4 billion (US$12,977 million)
because of the injection of public funds through the issue of preference shares and the
increase in capital resulting from allocation of common stocks to third parties.
Stockholders’ equity per share was ¥383.96, compared to ¥475.98 at March 31, 1998.
Tokai Bank’s capital ratio at March 31, 1999 rose to 12.60 percent from 10.25 percent a
year earlier due to the increase in stockholders’ equity and containment in risk-weighted
assets. Risk-weighted assets decreased 5.3 percent to ¥20,632.9 billion (US$171,156 million),
mainly because of the reduction in loans and bills discounted, as discussed under "Assets".
As of March 31
Tier I
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tier II
45% of unrealized gains on securities . . . . .
45% of difference from land revaluation . . . .
Reserve for loan losses (excluding specific
reserve) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other applicable items . . . . . . . . . . . . . . . . . .
(yen billions)
1999
1998
1997
¥ 1,598
¥ 1,179
¥ 1,053
¥
956
¥ 1,106
¥
¥
¥
¥
334
—
¥
—
71
97
834
—
65
90
900
Amount not included in Tier ll. . . . . . . . . . . .
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,003
¥ 1,055
256
—
1996
72
782
70
689
(57)
¥ 1,053
1995
68
698
(137)
¥
956
214
—
—
¥
980
Tier III
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
Total capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 2,602
¥ 2,234
¥ 2,106
¥ 1,912
¥ 2,085
Risk-weighted assets
Balance sheet amount . . . . . . . . . . . . . . . . . .
Off-balance-sheet amount . . . . . . . . . . . . . . .
¥19,558
948
¥20,377
1,158
¥21,382
1,781
¥20,896
1,680
¥21,387
1,716
20,506
21,535
23,163
22,576
23,103
127
10
248
20
—
—
—
—
—
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥20,633
¥21,783
¥23,163
¥22,576
¥23,103
Capital Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.60%
10.25%
9.09%
8.46%
9.02%
1999
1998
1997
1996
1995
¥383.96
(143.01)
¥475.98
5.33
¥473.80
6.59
¥472.86
(66.34)
¥548.67
2.28
Risk-weighted assets compiled for
credit risk. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk-weighted assets compiled for
market risk . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Reference) Market risk amount . . . . . . . . . .
Per Share Information
Net assets per share at year-end . . . . . . . . . . . .
Net income (loss) per share . . . . . . . . . . . . . . . . .
(yen)
Notes: 1) Net assets per share is calculated by deducting (number of preference shares at fiscal year end x issue price)
from net asset amount at fiscal year end, divided by number of common stocks at fiscal year end (excluding
treasury stock).
2) Net income (loss) per share is calculated using net income (loss) after deducting cash dividends for preference shares from net income (loss), divided by the average number of common stocks for the fiscal year.
Off-Balance-Sheet Transactions
Derivative Financial Instruments and Forward Foreign Exchange Contracts
(yen billions)
Contract/Notional
Amounts
Credit Risk
Amount
1999
1998
1999
1998
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forward foreign exchange contracts . . . . . . . . . . . . . . . . . .
Interest rate options (call) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency options (call) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other derivative financial instruments . . . . . . . . . . . . . . . . .
Effect of netting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥61,142
1,137
7,074
3,071
415
4,987
—
¥50,175
980
13,907
2,759
3,142
6,756
—
¥822
87
249
19
16
26
(691)
¥671
124
566
27
96
18
(687)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥77,826
¥77,718
¥527
¥815
Notes: 1) The amounts stated above are based on the risk-adjusted capital ratio (international standard). The current
exposure method is generally employed to calculate the credit risk amount.
2) Contract and notional amounts for exchange-traded contracts to which international standards do not
apply, and foreign exchange-related contracts with original contract terms of 14 days or less, were as
follows:
(yen billions)
Contract/Notional Amounts
1999
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forward foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate options (call) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate options (put). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency options (call) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Currency options (put) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
0
0
1,005
5,086
5,879
31
21
9,054
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥21,075
1998
¥
0
0
1,771
5,633
5,191
17
25
13,750
¥26,387
Credit-Related Transactions
(yen billions)
Contract Amount
1999
1998
Commitments to extend credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Guarantee contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥7,715
1,166
255
¥ 8,409
1,370
593
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥9,135
¥10,373
CONSOLIDATED BALANCE SHEETS
March 31, 1999 and 1998
ASSETS
Cash and Due from Banks (Note 3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Call Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial Paper and Other Debt Purchased . . . . . . . . . . . . . . . . . . . . .
Trading Assets (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money Held in Trust (Note 5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities (Note 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and Bills Discounted (Note 7). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Exchanges (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Assets (Note 9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premises and Equipment (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customers’ Liabilities for Acceptances and Guarantees (Note 11) . . . .
Deferred Tax Assets (Note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
LIABILITIES
Deposits (Note 12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Call Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading Liabilities (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowed Money (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Exchanges (Note 8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Liabilities (Note 15). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserve for Possible Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserve for Possible Losses on Collateralized Real Estate Loans Sold . . . .
Reserve for Retirement Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Reserves. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonds and Notes (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible Debt (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acceptances and Guarantees (Note 11) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land Revaluation Excess (Note 2e). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Tax Liabilities (Note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Tax Liabilities Relating to Land Revaluation (Note 2e). . . . . . .
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MINORITY INTERESTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
STOCKHOLDERS’ EQUITY
Capital Stock (Note 18):
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Surplus (Note 18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land Revaluation Excess . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earned Surplus (Notes 19 and 24). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
See notes to consolidated financial statements.
Millions of Yen
Thousands of
U.S. Dollars
(Note 1)
1999
1998
1999
¥ 1,320,426
622,698
185,964
1,252,664
254,512
4,574,963
18,869,157
366,782
2,476,536
363,696
1,171,592
380,720
¥31,839,710
¥ 1,789,428
371,531
4,592
1,943,701
288,529
4,279,644
20,504,164
372,039
3,328,107
333,608
1,417,776
287,609
¥34,920,728
$ 10,953,347
5,165,475
1,542,630
10,391,240
2,111,257
37,950,751
156,525,566
3,042,571
20,543,642
3,016,972
9,718,722
3,158,192
$264,120,365
¥20,842,935
2,222,484
637,564
757,751
119,599
3,446,876
315,611
70,186
36,296
9
452,313
1,799
1,171,592
—
282
65,853
30,141,150
134,130
¥22,051,406
1,666,282
1,131,428
1,506,152
115,661
4,374,295
804,298
74,722
34,431
4
397,615
1,799
1,417,776
145,047
—
—
33,720,916
134,025
$172,898,673
18,436,201
5,288,792
6,285,782
992,111
28,592,916
2,618,092
582,215
301,087
75
3,752,078
14,923
9,718,723
—
2,339
546,271
250,030,278
1,112,650
372,969
350,000
649,032
92,372
100,306
(249)
1,564,430
¥31,839,710
311,972
50,000
288,035
—
415,790
(10)
1,065,787
¥34,920,728
3,093,894
2,903,360
5,383,924
766,255
832,070
(2,066)
12,977,437
$264,120,365
CONSOLIDATED STATEMENTS OF OPERATIONS
Years Ended March 31, 1999 and 1998
INCOME
Interest on:
Loans and Discounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading Profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Income (Note 21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EXPENSES
Interest on:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings and Rediscounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and Commissions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and Administrative Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for Possible Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Expenses (Note 22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss) Income before Income Taxes and Minority Interest (Note 20). . . . . . .
Income Taxes (Note 14):
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority Interest in Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (Loss) Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of
U.S. Dollars
(Note 1)
Millions of Yen
1999
1998
1999
¥ 482,738
105,443
371,058
65,476
18,560
130,603
169,360
1,343,238
¥ 519,549
132,202
369,981
64,187
90,719
116,085
270,461
1,563,184
$ 4,004,463
874,683
3,078,042
543,144
153,961
1,083,393
1,404,894
11,142,580
233,110
58,268
346,069
11,214
4,042
74,755
273,287
150,668
560,445
1,711,858
(368,620)
313,279
71,053
322,848
19,875
72,047
30,079
288,858
306,542
122,273
1,546,854
16,330
1,933,720
483,351
2,870,751
93,024
33,530
620,116
2,267,001
1,249,838
4,649,067
14,200,398
(3,057,818)
6,111
(85,776)
(79,665)
2,192
¥ (286,763)
1,115
869
1,984
(89)
14,257
50,693
(711,539)
(660,846)
18,183
$ (2,378,789)
¥
Yen
Per Share of Common Stock:
Net (Loss) Income per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Dollars
¥(143.01)
¥5.33
$(1.19)
CONSOLIDATED STATEMENTS OF EARNED SURPLUS
Balance, Beginning of Year. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
INCREASE IN EARNED SURPLUS:
Exclusion of an affiliated company previously
included in consolidated accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment for newly consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . .
Increase in affiliated companies previously not
included in consolidated accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment for deferred income taxes due to
increase of consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exclusion of subsidiaries previously included in consolidated accounts . . . .
Merger with Tosho Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends — Paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (Loss) Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance, End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of
U.S. Dollars
(Note 1)
Millions of Yen
1999
1998
1999
¥415,790
¥411,358
$3,449,108
—
172
517
—
—
1,427
741
—
6,147
331
149
912
(31,026)
(286,763)
¥100,306
—
—
—
(10,342)
14,257
¥415,790
2,746
1,236
7,565
(257,370)
(2,378,789)
$ 832,070
CONSOLIDATED STATEMENTS OF CASH FLOWS
1999
OPERATING ACTIVITIES:
Net (Loss) Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to Reconcile Net (Loss) Income to Net Cash
Provided by Operating Activities:
Depreciation and Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for Reserve for Possible Loan Losses . . . . . . . . . . . . . . . . . . . . . .
Provision for Reserve for Possible Losses on
Collateralized Real Estate Loans Sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for (Reversal of) Reserve for Retirement Allowances. . . . . . . .
Provision for (Reversal of) Other Reserves . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Loss on Revaluation of Trading Assets and Liabilities . . . . . . . . . . . . .
(Benefit) Provision for Deferred Income Taxes . . . . . . . . . . . . . . . . . . . . . .
Net Gain on Sales and Maturities of Securities. . . . . . . . . . . . . . . . . . . . . . .
Loss on Sales and Exchange of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Gain on Dispositions of Premises and Equipment. . . . . . . . . . . . . . . .
Decrease (Increase) in Trading Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in Trading Account Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (Increase) in Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Decrease) Increase in Trading Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Decrease) Increase in Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in Minority Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other — Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of
U.S. Dollars
(Note 1)
Millions of Yen
¥ (286,763)
18,422
150,668
10,089
1,865
6
10,338
(92,829)
(99,830)
451,407
(303)
1,266,664
—
856,828
(1,079,829)
(921,702)
106
5,163
1998
¥
14,257
17,260
306,542
1,385
(549)
(17,257)
7,455
869
(222,417)
59,315
(54,162)
(1,581,973)
1,555,970
(307,556)
762,245
286,009
132,169
(232,914)
1999
$ (2,378,789)
152,816
1,249,838
83,691
15,471
50
85,757
(770,046)
(828,121)
3,744,562
(2,513)
10,507,375
—
7,107,657
(8,957,520)
(7,645,806)
879
42,829
Total Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
577,063
712,391
4,786,919
Net Cash Provided by Operating Activities. . . . . . . . . . . . . . . . . . . . . . . .
290,300
726,648
2,408,130
INVESTING ACTIVITIES:
Purchases of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from Sales and Maturities of Securities. . . . . . . . . . . . . . . . . . . . . .
Increase in Call Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (Increase) in Commercial Paper
and Other Debt Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Increase) Decrease in Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in Loans and Bills Discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (Increase) in Premises and Equipment . . . . . . . . . . . . . . . . . . . . . .
(5,016,899)
4,821,410
(251,167)
(5,333,843)
5,905,639
(272,890)
(41,616,748)
39,995,106
(2,083,509)
(181,372)
34,017
527,840
(35,029)
7,688
(78,865)
71,840
41,899
(1,504,538)
282,182
4,378,598
(290,577)
Net Cash (Used in) Provided by Investing Activities . . . . . . . . . . . . . . . . . .
(101,200)
341,468
FINANCING ACTIVITIES:
Issuance of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in Deposits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (Decrease) in Call Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayments of Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of Commercial Paper . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Issuance of Bonds and Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Decrease) Increase in Other Borrowed Money . . . . . . . . . . . . . . . . . . . . . . . .
Redemption of Convertible Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
718,896
(1,208,471)
556,202
43,000
(59,462)
58,000
12,160
(747,401)
—
(31,026)
—
(740,093)
(1,611,951)
164,174
(26,433)
—
30,818
49,183
(17,620)
(10,342)
5,963,467
(10,024,645)
4,613,870
356,698
(493,256)
481,128
100,871
(6,199,925)
—
(257,370)
Net Cash Used in Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(658,102)
(2,162,264)
(5,459,162)
Net Decrease in Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and Due from Banks, Beginning of Year. . . . . . . . . . . . . . . . . . . . . . . . . . .
(469,002)
1,789,428
(1,094,148)
2,883,576
(3,890,518)
14,843,865
(839,486)
Cash and Due from Banks, End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,320,426
¥1,789,428
$10,953,347
ADDITIONAL CASH FLOW INFORMATION:
Interest Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Taxes Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 557,760
6,438
¥ 795,222
5,058
$ 4,626,794
53,405
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTING THE FINANCIAL STATEMENTS
The accompanying consolidated financial statements of The Tokai Bank, Limited (the “Bank” or the
“Parent Company”) and consolidated subsidiaries have
been prepared in accordance with the provisions set
forth in the Securities and Exchange Law of Japan and
its related accounting regulation and the Accounting
Standards for Banks issued by the Japanese Bankers
Association and in accordance with accounting principles and practices generally accepted in Japan, which
are different in certain respects as to application and
disclosure requirements of International Accounting
Standards. The consolidated financial statements are
not intended to present the financial position, results
of operations and cash flows in accordance with
accounting principles and practices generally accepted
in countries and jurisdictions other than Japan.
In preparing the consolidated financial statements,
certain reclassifications and rearrangements have
been made to the financial statements issued domestically in order to present them in a form more familiar
to readers outside Japan. In addition, the consolidated
statements of cash flows are presented herein as additional information.
The consolidated financial statements are stated in
Japanese yen, the currency of the country in which
the Bank is incorporated and operates. The translations of Japanese yen amounts into U.S. dollar
amounts are included solely for the convenience of
readers outside Japan and have been made at the rate
of ¥120.55 to $1, the rate of exchange in effect at
March 31, 1999. Such translations should not be construed as representations that the Japanese yen
amounts could be converted into U.S. dollars at that or
any other rate.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation
The consolidated financial statements include the
accounts of the Bank and consolidated subsidiaries,
including Tokai Bank of California (a U.S. corporation),
Tokai Bank Europe plc (a U.K. corporation), Tokai Bank
Nederland N.V. (a Dutch corporation), Tokai Asia
Limited (a Grand Cayman corporation) and 40 other
subsidiaries in 1999 (23 other subsidiaies in 1998). All
significant intercompany balances and transactions
have been eliminated in consolidation. All material
unrealized profit included in assets resulting from
transactions within the Companies is eliminated.
Certain of the consolidated subsidiaries use a fiscal
year ending on December 31 which is different from
the Bank’s fiscal year. The consolidated financial statements include the financial statements of these subsidiaries for their respective fiscal years after making
appropriate adjustments for significant intercompany
transactions during the periods from their respective
fiscal year ends to the date of the consolidated
financial statements.
Sixteen (four in 1998) affiliated companies, including
Hanil Leasing Company Limited (a Korean corporation),
are accounted for by the equity method of accounting.
The consolidated financial statements do not include
the accounts of CS Networks Computer (Singapore) (a
Singapore corporation) and 2 other subsidiaries in 1999 (11
other subsidiaries in 1998), because the combined total
assets, total income, net income and earned surplus would
not have had a material effect on the consolidated financial
statements. Investments in these 3 unconsolidated subsidiaries and 7 other affiliates are stated at cost.
Effective April 1, 1998 the Bank and its subsidiaries
changed their consolidation scope from the application of the ownership concept to the control concept.
Under the control concept, those companies in which
the Parent, directly or indirectly, is able to exercise
control over operations are to be fully consolidated.
The consolidated financial statements for the year
ended March 31, 1998, are not retroactively adjusted.
The change of earned surplus arising from the change
in the consolidation scope is recognized as
“Adjustment for Newly Consolidated Subsidiaries” in
the consolidated statements of earned surplus for the
year ended March 31,1999.
(b) Trading Purpose Transactions
Transactions for trading purposes (the purpose of
seeking to capture gains arising from short-term
changes in interest rates, currency exchange rates or
market prices of securities and other market-related
indices or from gaps among markets) are included in
“Trading Assets” and “Trading Liabilities” on a trade
date basis. Trading securities and monetary claims purchased for trading purposes recorded in these
accounts are stated at market value and trading-related financial derivatives are at the amounts that would
be settled if they were terminated at the end of the
fiscal year.
Profit and losses on transactions for trading purposes are shown as “Trading Profits” or “Trading
Losses” on a trade date basis.
(C) Securities
Securities are valued principally at average cost.
Shares of stock, debentures and other securities
included in money held in trust of the Bank listed on
stock exchanges are valued at the lower of cost or
market, and unlisted other securities included in
money held in trust of the Bank are valued at amortized cost.
(d) Premises and Equipment
Premises and equipment are stated at cost.
Depreciation is computed by the declining-balance
method while the straight-line method is applied to
buildings acquired after April 1, 1998.
The Bank changed the useful lives of buildings. The
effect of the change was to increase depreciation
expense and to increase loss before income taxes by
¥319 million ($2,646 thousand).
Depreciation of premises and equipment of the
consolidated subsidiaries is computed principally by
the straight-line method over the estimated useful
lives of the assets.
(e) Land Revaluation
Under the new “Law of Land Revaluation,” revised
and promulgated on March 31, 1999 and 1998, respectively, the Bank elected a one-time revaluation for its
own-use land to current value based on real estate
appraisal information as of March 31, 1998, partially as
of March 31, 1999.
The resulting land revaluation excess representing
unrealized appreciation of land is stated net of income
taxes as a separate component of stockholders’ equity
in 1999, while it was stated as a liability in 1998. There is
no effect on the statement of operations. Continuous
readjustment is not permitted unless the value of the
land has subsequently significant declines such that
the amount of the decline in value should be removed
from the land revaluation excess account and deferred
tax liabilities. The details of the effect of revaluation as
of March 31, 1999 and 1998, are as follows:
Millions of Yen
1999
Land before revaluation . . . . . .
Land after revaluation . . . . . . . .
Land revaluation excess . . . . . .
(Net of income taxes) . . . . . .
1998
¥ 71,792 ¥ 54,516
230,617 199,563
158,225 145,047
(92,372)
—
Thousands
of U.S. Dollars
1999
$ 595,537
1,908,063
1,312,526
(766,255)
(f) Deferred Charges
Stock issuance costs are charged to income as
incurred.
(g) Reserve for Possible Loan Losses
The amount of the provision for reserve for possible loan losses is determined based on management’s
judgment and assessment of future losses.
The Bank has implemented the self-assessment system for its asset quality. The quality of all loans is
assessed by branches and business units with a subsequent audit by the credit review department in accordance with the Bank’s policy and rules for self-assessment of asset quality.
The Bank has established a credit rating system
under which customers are classified into five categories. All loans are classified for self assessment purposes in the following categories “formal bankruptcy,”
“de facto bankruptcy,” “bankruptcy risk,” “watch” and
“normal.”
The Bank provided for reserve for possible loan
losses at an amount deemed necessary to cover possible losses. The reserve is estimated based on the fair
value of collateral and guarantee for the formal bank-
ruptcy and the de facto bankruptcy category loans,
the fair value of collateral as well as other factors of
solvency including borrower’s future cash flows for
the bankruptcy risk category and the actual past loss
experience for the watch and the normal category
loans.
Provision for possible loan losses relating to
restructuring countries is made to cover possible
losses caused by political and economic difficulties of
respective countries.
With respect to loans with collateral and/or guarantees extended to borrowers in formal bankruptcy, or
borrowers in de facto bankruptcy, the unrecoverable
amount is estimated by deducting from the loan
amount the realizable value of collateral or the
amount likely to be recovered based on guarantees.
The outstanding amount thus determined is then
directly written off from the loan amount as the
amount that is not likely to be recovered, which is
¥385,376 million in 1999.
Each of the consolidated subsidiaries maintains a
reserve for possible loan losses which is provided at
amounts deemed necessary to cover such losses,
based on their own experience in the past and their
own estimate of future recoverability. Each of the
domestic consolidated subsidiaries maintains a
reserve for possible loan losses which is provided by
the same manner as the Bank.
(h) Reserve for Possible Losses on Collateralized Real
Estate Loans Sold
The reserve for possible losses on loans collateralized by real estate sold to the Cooperative Credit
Purchasing Company, Limited (“CCPC”) is provided at
an amount deemed necessary to cover possible losses
based on the estimated fair value of real estate. In
accordance with the terms of the loans collateralized
by real estate sales contracts, the Bank is required to
cover certain portions of losses incurred as defined in
the contract, when CCPC disposes of real estate in
satisfaction of debt.
(i) Reserve for Retirement Allowances and Pension
Plans
Under most circumstances, employees of the Bank
terminating their employment are entitled to lumpsum payments determined by reference to the basic
rate of pay at the time of termination, length of service and other conditions under which the termination occurs. If the termination is involuntary, employees are usually entitled to greater payment than in the
case of voluntary termination. In accordance with the
Accounting Standards for Banks issued by the
Japanese Bankers Association, the reserve for retirement allowances represents the amount which would
be required if all employees terminated their employment under voluntary conditions at each balance
sheet date. The accrued provisions are not funded.
In addition, the Bank has a contributory pension plan
covering substantially all employees. The policy for the
plan is to fund and charge to income normal costs as
accrued, on the basis of an accepted actuarial method.
Substantially all of the foreign consolidated subsidiaries have funded pension plans for employees.
(j) Other Reserves
Other reserves of the Bank include the reserve for
contingent liabilities from brokering of futures transactions and the reserve for securities transaction liabilities.
The reserve for contingent liabilities from brokering of futures transactions is required to be provided
under the Financial Futures Transaction Law of Japan.
The reserve for securities transaction liabilities is
required to be provided under the Securities and
Exchange Law of Japan.
Amendments of the Accounting Standards for
Banks eliminated the requirements for provision for
the reserve for price fluctuations of national government bonds and the reserve for possible losses on
sales of trading account securities and the Bank
ceased providing these reserves and reversed these
reserves charged to income for the year ended March
31, 1998.
holders’ equity accounts are included in “Other Assets”
in the consolidated balance sheets.
Assets and liabilities denominated in foreign currencies held by the Bank at the year end are translated into
Japanese yen at exchange rates prevailing at the end of
each fiscal year except that certain special accounts are
translated at historical rates. Accounts of the Bank’s
overseas branches are combined with those of the
head office after translation into Japanese yen at
exchange rates prevailing at the end of each fiscal year.
Foreign currency accounts held by consolidated foreign subsidiaries are translated into the currency of the
subsidiaries at the respective year-end exchange rates.
(n) Amortization of Goodwill
The excess of the cost of the Bank’s investments in
consolidated subsidiaries and affiliated companies
accounted for by the equity method, over its equity in
the net assets at the respective dates of acquisition, is
charged to income as incurred.
(o) Dividends
Dividends are generally paid semiannually. Interim
and year-end dividends are authorized subsequent to
the end of the period to which they are related, and
are reflected in the consolidated statements of earned
surplus when duly declared and authorized.
(k) Lease Transactions
(p) Per Share Information
All leases of the Bank are accounted for as operating leases. Under Japanese accounting standards for
leases, finance leases that deem to transfer ownership
of the leased property to the lessee are to be capitalized, while other finance leases are permitted to be
accounted for as operating lease transactions if certain
“as if capitalized” information is disclosed in the notes
to the lessee’s consolidated financial statements.
Net income per share of common stock is based on
the average number of common shares outstanding in
the respective fiscal year. Diluted net income per share
is not disclosed because the net loss is stated in 1999
and it is anti-dilutive in 1998.
3. CASH AND DUE FROM BANKS
Cash and due from banks consist of the following:
(l) Income Taxes
Deferred income taxes are recorded to reflect the
impact of temporary differences between assets and
liabilities recognized for financial reporting purposes
and such amounts recognized for tax purposes and
loss carryforwards. These deferred taxes are measured
by applying currently enacted tax rates to the temporary differences.
Thousands
of U.S. Dollars
Millions of Yen
1999
1998
1999
Cash on hand . . . . . . . . . . . . . ¥ 443,566 ¥ 445,413 $ 3,679,519
Due from banks . . . . . . . . . . .
876,860 1,344,015
7,273,828
Total . . . . . . . . . . . . . . . . . . ¥1,320,426 ¥1,789,428 $10,953,347
(m) Foreign Currency Items
The income statement items of foreign consolidated subsidiaries and affiliates are translated into
Japanese yen at average exchange rates of the respective year. The balance sheet items of foreign consolidated subsidiaries and affiliates are translated into
Japanese yen at exchange rates as of each balance
sheet date, except for the common stock and capital
surplus of certain consolidated subsidiaries, which are
translated at historical rates. The differences resulting
from applying different exchange rates to the stock63 The Tokai Bank, Limited
4. TRADING ASSETS AND LIABILITIES
6. SECURITIES
Trading assets and liabilities at March 31, 1999 and
1998, consist of the following:
Securities consist of the following:
Millions of Yen
Thousands
of U.S. Dollars
Millions of Yen
1999
Trading assets:
Trading securities . . . . . .
Derivatives associated
with trading account
securities . . . . . . . . . . . .
Securities held for
trading purposes . . . . . .
with securities held
for trading purposes . .
Derivative financial
instruments . . . . . . . . . .
Other trading assets . . . .
Total . . . . . . . . . . . . . . . .
Trading liabilities:
Trading securities sold
for short sales . . . . . . . .
with trading account
securities . . . . . . . . . . . .
Securities sold for
trading purposes. . . . . .
with securities held for
trading purposes. . . . . .
Derivative financial
instruments . . . . . . . . . .
Other trading liabilities . .
Total . . . . . . . . . . . . . . . .
¥
1998
1999
69,659 ¥ 174,305
$
577,843
37
3,713
307
297,234
945,047
2,465,649
187
491
1,551
460,270
425,277
361,189
458,956
3,818,084
3,527,806
¥1,252,664 ¥1,943,701
$10,391,240
1999
1998
Thousands
of U.S. Dollars
1999
National government
bonds . . . . . . . . . . . . . . . . . . ¥ 771,154 ¥1,013,818 $ 6,396,964
Local government bonds . . .
307,492
233,625
2,550,742
Debentures . . . . . . . . . . . . . . .
341,712
162,277
2,834,608
Shares of stock . . . . . . . . . . . . 2,425,733 2,221,181 20,122,215
Other securities . . . . . . . . . . .
728,872
648,743
6,046,222
Total . . . . . . . . . . . . . . . . . . ¥4,574,963 ¥4,279,644 $37,950,751
The carrying values and aggregate market values of
the securities held by the Bank, which are listed on
stock exchanges or over-the-counter markets, at March
31, 1999 and 1998, are as follows:
Millions of Yen
1999
¥
25,316 ¥
8,509
$
210,004
187
5
1,551
115,912
440,720
961,526
13
318,616
108
471,134
25,002
363,578
3,908,204
207,399
¥ 637,564 ¥1,131,428
$ 5,288,792
1998
Thousands
of U.S. Dollars
1999
Securities:
Carrying value . . . . . . . . . . . ¥3,784,827 ¥3,353,027 $31,396,325
Aggregate market value. . . 3,988,623 3,607,119 33,086,877
Securities excluded from above are principally
unlisted securities.
Millions of Yen
1999
Securities . . . . . . . . . . . . . . . . .
1998
¥893,011 ¥1,062,529
Thousands
of U.S. Dollars
1999
$7,407,806
7. LOANS AND BILLS DISCOUNTED
Loans and bills discounted consist of the following:
5. MONEY HELD IN TRUST
The carrying values and aggregate market values of
the money held in trust held by the Bank, which are
based on the prices listed on stock exchanges or overthe-counter markets, at March 31, 1999 and 1998 are as
follows:
Millions of Yen
1999
Money held in trust:
Carrying value . . . . . . . . .
Aggregate market value . .
¥ 248,860
245,535
1998
¥ 278,529
279,764
Thousands
of U.S. Dollars
Millions of Yen
1999
1998
Thousands
of U.S. Dollars
1999
Bills discounted. . . . . . . . . ¥ 401,639 ¥ 514,676 $ 3,331,721
Loans on notes . . . . . . . . .
3,872,336
3,894,232
32,122,240
Loans on deeds . . . . . . . . . 11,619,574 12,451,334
96,388,005
Overdrafts . . . . . . . . . . . . .
2,975,608
3,643,922
24,683,600
Total . . . . . . . . . . . . . . . ¥18,869,157 ¥20,504,164 $156,525,566
1999
$2,064,372
2,036,790
Loans to borrowers in legal bankruptcy of the Bank
amounted to ¥72,564 million ($601,941 thousand) and
¥310,478 million at March 31, 1999 and 1998, respectively.
The Bank has not accrued interest on such loans,
because the collection or repayment of principal or
interest is not expected for reasons such as, nonpayment of principal or interest which continued for a
considerable length of time (excluding the portions
being directly charged off) (hereinafter referred to as
‘loans for which accrued interest has not been
accounted’), those loans for which exists a situation as
provided under the Corporate Tax Law Article 96-1-3
items (i) to (v) (Ordinance 97 of 1965), or as prescribed in
Article 96-1-4.
Overdue loans of the Bank amounted to ¥248,384
million ($2,060,423 thousand) and ¥526,945 million at
March 31, 1999 and 1998, for which interest has not
been accrued, excluding the loans to borrowers in
legal bankruptcy, and the loans for which interest payment has been temporarily suspended with the consent of the lender for the purpose of restructuring the
business of, or supporting, the borrower. Furthermore, as
a result of directly writing off the estimated unrecoverable amount mentioned above, loans to borrowers
in legal bankruptcy and overdue loans decreased by
¥124,664 million ($1,034,127 thousand) and ¥161,187 million ($1,337,097 thousand), respectively, compared to
the figures based on the previously used method.
Loans overdue for at least three months of the
Bank amounted to ¥63,887 million ($529,963 thousand)
at March 31, 1999 for which payment of principal or
interest is overdue for at least three months from the
day following the contractual payment date, and
excludes loans to borrowers in legal bankruptcy or
overdue loans as above.
Loans with concessions in terms of the Bank
amounted to ¥91,162 million ($756,217 thousand) at
March 31,1999 for which the Bank has made some concessions in terms beneficial to the borrower, such as,
reduction or forgiveness of interest rate, suspension
of interest payment or of principal payment, waiver of
claims, for the purpose of restructuring the business
of, or supporting the borrower, except for those
falling under overdue loans and loans overdue for at
least three months.
Loans overdue for at least three months and loans
with concessions in terms were not required to be disclosed in 1998.
The total of loans to borrowers in legal bankruptcy,
overdue loans, loans overdue for at least three months
and loans with concessions in terms of the Bank
amounted to ¥475,997 million ($3,948,544 thousand) at
March 31, 1999.
Effective April 1998, loans to borrowers in legal
bankruptcy, overdue loans, loans overdue for at least
three months and loans with concessions in terms of
the Bank and consolidated subsidiaries are required to
be disclosed. Loans to borrowers in legal bankruptcy
amounted to ¥76,595 million ($635,380 thousand) at
March 31, 1999. Overdue loans amounted to ¥257,111
million ($2,132,816 thousand) at March 31, 1999. Loans
overdue for at least three months amounted to
¥64,469 million ($534,791 thousand) at March 31, 1999.
Loans with concessions in terms amounted to ¥93,791
million ($778,026 thousand) at March 31, 1999. The total
of loans to borrowers in legal bankruptcy, overdue
loans, loans overdue for at least three months and
loans with concessions in terms of the Bank and consolidated subsidiaries amounted to ¥491,966 million
($4,081,012 thousand) at March 31, 1999.
8. FOREIGN EXCHANGES
Foreign exchanges consist of the following:
Millions of Yen
1999
1998
Thousands
of U.S. Dollars
1999
Assets:
Due from foreign
correspondents . . . . . . . . . . . . ¥ 76,682 ¥ 14,082 $ 636,101
Foreign bills of
exchange bought . . . . . . . . . . . 210,925 252,301 1,749,689
Foreign bills of
exchange receivable . . . . . . . . .
79,175 105,656
656,781
Total. . . . . . . . . . . . . . . . . . . . . . ¥366,782 ¥372,039 $3,042,571
Liabilities:
Due to foreign
correspondents . . . . . . . . . . . . . ¥117,894 ¥112,858 $ 977,968
Foreign bills of
exchange sold . . . . . . . . . . . . . .
628
856
5,209
Foreign bills of
exchange payable . . . . . . . . . . .
1,077
1,947
8,934
Total. . . . . . . . . . . . . . . . . . . . . . ¥119,599 ¥115,661 $ 992,111
9. OTHER ASSETS
Other assets consist primarily of prepaid expenses,
accrued income and securities for custody.
10. PREMISES AND EQUIPMENT
Accumulated depreciation amounted to ¥205,210
million ($1,702,281 thousand) and ¥187,597 million at
March 31, 1999 and 1998, respectively.
11. CUSTOMERS’ LIABILITIES FOR ACCEPTANCES AND
GUARANTEES
All contingent liabilities arising from acceptances
and guarantees are reflected in acceptances and guarantees. As a contra account, customers’ liabilities for
acceptances and guarantees are shown as assets representing the Bank’s right of indemnity from customers.
12. DEPOSITS
Deposits consist of the following:
Millions of Yen
1999
1998
Thousands
of U.S. Dollars
1999
Current deposits. . . . . . . . ¥ 463,053 ¥ 474,346 $ 3,841,170
Ordinary deposits . . . . . . .
5,078,072
4,615,375
42,124,197
Deposits at notice . . . . . .
516,233
520,173
4,282,314
Time deposits . . . . . . . . . . 11,124,030 12,543,080
92,277,312
Negotiable certificates
of deposit. . . . . . . . . . . . .
2,298,897
1,993,610
19,070,071
Other deposits . . . . . . . . .
1,362,650
1,904,822
11,303,609
Total . . . . . . . . . . . . . . . ¥20,842,935 ¥22,051,406 $172,898,673
17. CONVERTIBLE DEBT
13. BORROWED MONEY
Borrowed money includes subordinated borrowings of the Bank, which amounted to ¥577,000 million
($4,786,396 thousand) and ¥636,000 million at March 31,
1999 and 1998, respectively.
14. INCOME TAXES
The Bank and its domestic subsidiaries are subject to
Japanese national and local income taxes which, in the
aggregate, resulted in a normal effective statutory tax
rate of approximately 47% and 51% for the years ended
March 31, 1999 and 1998, respectively. On March 31, 1999,
a tax reform law was enacted in Japan which changed
the normal effective statutory tax rate from approximately 47% to 42% effective for years beginning April 1,
1999.
The tax effects of significant temporary differences
and loss carryforwards which result in deferred tax
assets and liabilities at March 31, 1999, are as follows:
Deferred tax assets:
Tax loss carryforwards . . . . . . . .
Loss on devaluation
of securities . . . . . . . . . . . . . . . .
Reserve for possible losses
on collateralized real estate
loans sold . . . . . . . . . . . . . . . . . .
Difference between book
and tax bases of reserve for
possible loan losses . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . .
Millions of Yen
Thousands
of U.S. Dollars
¥188,686
$1,565,209
15,135
125,550
28,471
236,176
123,275
25,153
1,022,605
208,652
¥380,720
$3,158,192
Deferred tax liabilities . . . . . . . .
¥
$
Net deferred tax assets . . . . . . .
¥380,438
282
2,339
$3,155,853
The amounts of tax effects at March 31, 1998 were
not required to be disclosed.
15. OTHER LIABILITIES
Other liabilities consist primarily of accrued expenses, unearned income, borrowed securities, deposits
received for repurchase agreements and accounts
payable for trading transactions.
16. BONDS AND NOTES
Bonds and notes include subordinated bonds and
notes, which amounted to ¥424,022 million ($3,517,395
thousand) and ¥381,484 million at March 31, 1999 and
1998, respectively.
Convertible debt consists of the following:
Millions of Yen
2-3/8% U.S. dollar convertible
bonds due 2001. . . . . . . . . . . . . . . . .
Thousands
of U.S. Dollars
1999
1998
1999
¥1,799
¥1,799
$14,923
The 2-3/8% U.S. dollar convertible bonds due 2001
are convertible into common stock at a conversion
price of ¥992.20 per share at March 31, 1999, subject to
adjustment in certain circumstances including the
authorization of a stock split, with a fixed rate of
exchange applicable upon conversion of U.S. $1=¥155.50.
18. CAPITAL STOCK AND CAPITAL SURPLUS
The authorized numbers of shares at March 31, 1999
and 1998, were 4,750 million and 4,360 million shares of
common stock with a par value of ¥50 per share,
respectively, and were 650 million and 100 million
shares of non-voting, non-cumulative preferred stock
without par value, respectively.
Under the Commercial Code of Japan (the “Code”),
at least 50% of the issue price of new shares, with a
minimum of the par value thereof, is required to be
designated as stated capital. The portion which is to
be designated as stated capital is determined by resolution of the Board of Directors. Proceeds in excess of
the amounts designated as stated capital have been
credited to capital surplus.
The Bank may transfer portions of capital surplus
and legal reserve to stated capital by resolution of the
Board of Directors. The Bank may also transfer portions of unappropriated retained earnings, available
for dividends, to stated capital by resolution of the
stockholders.
Under the Code, the Bank may issue new common
shares to existing stockholders without consideration
as a stock split pursuant to resolution of the Board of
Directors. The Bank may make such a stock split to the
extent that the aggregate par value of the shares outstanding after the issuance does not exceed the stated capital. However, the amount calculated by dividing
the total amount of stockholders’ equity by the number of outstanding shares after the issuance shall not
be less than ¥50.
Under the Code, the amount available for dividends
is based on retained earnings as recorded on the
Bank’s books. At March 31, 1999, retained earnings
recorded on the Bank’s books were ¥78,805 million
($653,712 thousand) which is available for future dividends subject to the approval of stockholders and
legal reserve requirements (see Note 24).
On March 31, 1999, the Bank issued 222,617,000
shares of common stock with a par value of ¥50 per
share at the issue price of ¥548 per share.
Under the Law concerning Emergency Measures for
the Revitalization of the Functions of the Financial
System, the Bank has aimed to boost its capital base
through the capital injection of public funds. On March
31, 1999, the Bank issued 300,000,000 shares convertible
bonds type non-voting and non-cumulative preferred
stock without par value convertible to 3.552 shares of
common stock at the issue price of ¥2,000 per share,
which were totally subscribed by Resolution and
Collection Bank, Limited (renamed the Resolution and
Collection Corporation).
20. SEGMENT INFORMATION
The Bank and its consolidated subsidiaries operate
predominantly in the banking business and certain
subsidiaries operate in securities, trust and leasing
industries, although those comprise a minor share of
the Bank’s total business.
The operations of the Bank and consolidated subsidiaries for the years ended March 31, 1999 and 1998,
are summarized by geographic area as follows:
Changes in common stock, preferred stock and
capital surplus are as follows:
Thousands
of U.S. Dollars
Millions of Yen
1999
Common stock:
Balance, beginning of year . . .
Issuance of common stock . .
Balance, end of year . . . . . . . .
¥311,972
60,997
¥372,969
1998
1999
¥311,972
—
¥311,972
$2,587,905
505,989
$3,093,894
(Shares issued and
(2,251,676 (2,029,059
outstanding,
thousand thousand
end of year) . . . . . . . . . . . . . . . .
shares)
shares)
Preferred stock:
Balance, beginning of year . . .
Issuance of
preferred stock . . . . . . . . . . .
Balance, end of year . . . . . . . .
¥ 50,000
¥ 50,000
$ 414,766
300,000
—
2,488,594
¥350,000
¥ 50,000
$2,903,360
(Shares issued and
(350,000
(50,000
outstanding,
thousand thousand
end of year) . . . . . . . . . . . . . . . .
shares)
shares)
Capital surplus:
Balance, beginning
of year . . . . . . . . . . . . . . . . . . .
Add:
Issuance of common stock . .
Issuance of preferred
stock . . . . . . . . . . . . . . . . . . .
Balance, end of year . . . . . . . . .
¥288,035
¥288,035
$2,389,341
60,997
—
505,989
300,000
—
2,488,594
¥649,032
¥288,035
$5,383,924
19. EARNED SURPLUS
Under the Bank Law of Japan, an amount equivalent
to at least 20% of cash dividends and bonuses to directors and statutory auditors must be appropriated as a
legal reserve, until the reserve equals 100% of the
Bank’s stated capital. This reserve amount, which is
included in earned surplus, totals ¥67,969 million
($563,824 thousand) and ¥61,675 million as of March 31,
1999 and 1998, respectively, and is not available for dividends, but may be used to reduce a deficit by resolution of the stockholders or may be capitalized by resolution of the Board of Directors.
Millions of Yen
Year Ended March 31, 1999
Japan
America
Ordinary income:
Outside customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interarea transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,004,259
134,161
¥ 101,574
43,005
Ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,138,420
1,524,763
144,579
130,243
¥
(386,343)
¥
Europe
14,336
¥
¥
Others
97,172
19,119
¥ 105,022
111,665
116,291
131,974
216,687
222,793
(15,683)
¥
(6,106)
Eliminations
Consolidated
¥
—
(307,950)
¥ 1,308,027
—
(307,950)
(303,258)
1,308,027
1,706,515
¥
(4,692)
(398,488)
Other income–net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
29,868
Income before income taxes and minority interest . . .
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
¥28,973,857
¥1,957,303
¥1,319,711
¥2,312,899
Japan
America
Europe
Others
Ordinary income:
Outside customers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interarea transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,019,693
157,607
¥ 123,406
28,162
¥ 235,262
23,927
¥ 107,427
134,565
Ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,177,300
1,230,237
151,568
140,173
259,189
268,241
241,992
238,695
(368,620)
¥(2,724,060)
¥31,839,710
Eliminations
Consolidated
¥
—
(344,261)
¥ 1,485,788
—
(344,261)
(340,482)
1,485,788
1,536,864
Millions of Yen
¥
(52,937)
¥
11,395
¥
(9,052)
¥
3,297
¥
(3,779)
(51,076)
Other income–net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67,406
Income before income taxes and minority interest . . .
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
¥31,260,914
¥2,123,488
¥2,863,388
¥2,944,278
¥(4,271,340)
16,330
¥34,920,728
Thousands of U.S. Dollars
Ordinary income:
Outside customers . . . . . . . . . . . . . . . . . . . . . . . .
Interarea transfer . . . . . . . . . . . . . . . . . . . . . . . . .
Ordinary expenses . . . . . . . . . . . . . . . . . . . . . . . . . .
Japan
$
8,330,643
1,112,908
America
$
9,443,551
12,648,387
$ (3,204,836)
842,588
356,740
Europe
$
1,199,328
1,080,407
$
118,921
806,072
158,598
Others
$
964,670
1,094,766
$
(130,096)
871,190
926,296
Eliminations
Consolidated
$
—
(2,554,542)
$ 10,850,493
—
(2,554,542)
(2,515,620)
10,850,493
14,156,078
1,797,486
1,848,138
$
(50,652)
$
(38,922)
Other income–net. . . . . . . . . . . . . . . . . . . . . . . . . . .
247,767
Income before income taxes
and minority interest. . . . . . . . . . . . . . . . . . . . . . .
Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (3,057,818)
$240,347,217
“Others” consist principally of People’s Republic of
China and Singapore.
“Ordinary income” is total income less certain special income included in other income in the accompanying consolidated statements of operations.
Ordinary income is summarized by geographic area
based on the countries where branches or subsidiaries
are located.
Ordinary income arising from international operations which are produced both in and outside Japan
was ¥558,918 million ($4,636,400 thousand) and ¥698,496
million, or 42.7% and 47.0% of total ordinary income for
the years ended March 31, 1999 and 1998, respectively.
(3,305,585)
$16,236,441
$10,947,416
$19,186,222
$(22,596,931)
$264,120,365
21. OTHER INCOME
Other income for the years ended March 31, 1999
and 1998, consists of the following:
Millions of Yen
1999
1998
Thousands
of U.S. Dollars
1999
Gain on sales of stocks
and other securities . . . . . . . . . . ¥115,681 ¥172,536 $ 959,610
Gain on money held in trust . . . .
7,280
4,140
60,390
Gain on dispositions of premises
and equipment . . . . . . . . . . . . . .
3,894
59,451
32,302
Recoveries of claims written off . .
57
29
473
Reversal of price fluctuations
of national government bonds . .
—
7,367
—
Reversal of possible losses
on sales of trading account
securities . . . . . . . . . . . . . . . . . . .
—
9,844
—
Other . . . . . . . . . . . . . . . . . . . . . . . .
42,448
17,094
352,119
Total . . . . . . . . . . . . . . . . . . . . . ¥169,360 ¥270,461 $1,404,894
22. OTHER EXPENSES
Obligations under finance leases:
Other expenses for the years ended March 31, 1999
and 1998, consist of the following:
Thousands
of U.S. Dollars
Millions of Yen
1999
1998
1999
Write-off of claims . . . . . . . . . . . . ¥223,734 ¥ 19,619 $1,855,944
Loss on sales of stocks
and other securities . . . . . . . . . .
34,620
11,398
287,184
Loss on devaluation of stocks
and other securities . . . . . . . . . .
20,601
6,022
170,892
Loss on money
held in trust . . . . . . . . . . . . . . . . .
2,245
1,086
18,623
Enterprise tax . . . . . . . . . . . . . . . .
—
50
—
Loss on dispositions of
premises and equipment . . . . .
3,591
5,290
29,788
Other . . . . . . . . . . . . . . . . . . . . . . . . 275,654
78,808 2,286,636
Total. . . . . . . . . . . . . . . . . . . . . . ¥560,445 ¥122,273 $4,649,067
Loss on sales of loans of the Bank collateralized by
real estate to the Cooperative Credit Purchasing
Company, Limited which amounted to ¥27,112 million
($224,903 thousand) and ¥9,111 million in 1999 and 1998,
respectively, and losses from financial assistance provided to customers by the Bank which amounted to
¥179,387 million ($1,488,071 thousand) and ¥40,263 million in 1999 and 1998 are included in “Other.”
Millions of Yen
Thousands
of U.S. Dollars
Due within one year . . . . . . . . . .
Due after one year . . . . . . . . . . . .
¥ 3,895
7,133
$32,310
59,171
Total . . . . . . . . . . . . . . . . . . . . .
¥11,028
$91,481
For the year ended March 31, 1998
Millions of Yen
Due within one year . . . . . . . . . . . . . . . . . . . . . . . . . .
Due after one year . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 2,900
6,044
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 8,944
The imputed interest expense portion which is
computed using the interest method is excluded from
the above obligations under finance leases.
Depreciation expense and interest expense, which
are not reflected in the accompanying consolidated
statements of operations, computed by the straightline method and the interest method were ¥4,151 million ($34,434 thousand) and ¥722 million ($5,989 thousand),respectively, for the year ended March 31, 1999.
The minimum rental commitments under noncancelable operating leases as of March 31, 1999 and
1998, were as follows:
Millions of Yen
Thousands
of U.S. Dollars
Due within one year . . . . . . . . . . . .
Due after one year . . . . . . . . . . . . .
¥174
574
$1,443
4,762
Total. . . . . . . . . . . . . . . . . . . . . . .
¥748
$6,205
23. LEASE TRANSACTIONS
Lessee
The Bank and consolidated subsidiaries lease certain equipment and other assets.
Pro forma information of leased property such as
acquisition cost, accumulated depreciation, obligation
under finance lease, depreciation expense, interest
expense of finance leases that do not transfer ownership of the leased property to the lessee on an "as if
capitalized" basis for the year ended March 31, 1999
and 1998, was as follows:
Millions of Yen
¥ 204
801
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,005
Millions of Yen
Equipment Other
Acquisition
cost . . . . . . . . . . ¥27,097
Accumulated
depreciation. . . 17,080
Net leased
property . . . . . . ¥10,017
Total
Thousands
of U.S. Dollars
Equipment
Other
Total
$224,778
$2,688
$227,466
17,118
141,684
315
141,999
¥286 ¥10,303
$ 83,094
$2,373
$ 85,467
¥324 ¥27,421
38
Lessor
24. APPROPRIATION OF EARNED SURPLUS
The consolidated subsidiaries lease certain equipment and other assets.
Pro forma information of leased property such as
acquisition cost, accumulated depreciation, rights
under finance leases, depreciation expense, interest
expense of finance leases that do not transfer ownership of the leased property to the lessee on an "as if
capitalized" basis for the years ended March 31, 1999
and 1998, was as follows:
The following plan of the Bank for the appropriation of unappropriated profit was approved at the
ordinary stockholders meeting held on June 29, 1999.
Millions of Yen
Thousands
of U.S. Dollars
Acquisition cost. . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . .
¥640
480
$5,309
3,982
Net leased property . . . . . . . . . . . .
¥160
$1,327
Millions of Yen
Thousands
of U.S. Dollars
Due within one year . . . . . . . . . . . .
Due after one year . . . . . . . . . . . . .
¥101
75
$ 838
622
Total. . . . . . . . . . . . . . . . . . . . . . .
¥176
$1,460
Equipment
Rights under finance leases:
Millions of Yen
¥104
79
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥183
The imputed interest income portion which is computed using the interest method is excluded from the
above rights under finance leases.
Depreciation expense and interest income, which
are not reflected in the accompanying consolidated
statements of operations, computed by the straightline method and the interest method were ¥99 million
($821 thousand) and ¥9 million ($75 thousand), respectively, for the year ended March 31, 1999.
The minimum rental commitments under noncancelable operating leases as of March 31, 1999 and
1998, were as follows:
Millions of Yen
Thousands
of U.S. Dollars
Due within one year. . . . . . . . .
Due after one year . . . . . . . . . .
¥1
0
$8
0
Total . . . . . . . . . . . . . . . . . . .
¥1
$8
Millions of Yen
¥1
2
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥3
Millions of Yen
Appropriations:
Legal reserve . . . . . . . . . . . . . . . . . . .
Year-end dividends:
The first preferred, ¥34.375
($0.2852) per share . . . . . . . . . . . . . .
The second preferred, ¥0.06
($0.0005) per share . . . . . . . . . . . . . .
The third preferred, ¥0.06
($0.0005) per share . . . . . . . . . . . . . .
Common, ¥2.75 ($0.02281) per share. .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands
of U.S. Dollars
¥1,600
$13,272
1,719
14,259
9
75
9
6,192
75
51,365
¥9,529
$79,046
25. FINANCIAL INFORMATION OF THE PARENT COMPANY
Non-Consolidated Balance Sheets Information
March 31, 1999 and 1998
Thousands of
U.S. Dollars
(Note 1)
Millions of Yen
1999
1998
1999
ASSETS
Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Call Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial Paper and Other Debt Purchased. . . . . . . . . . . . . . . . . . . . .
Trading Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and Bills Discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Exchanges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Premises and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customers’ Liabilities for Acceptances and Guarantees. . . . . . . . . . . . .
Deferred Tax Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 1,307,554
616,986
175,728
791,655
248,860
4,677,838
18,676,833
364,484
1,182,003
346,025
1,604,825
370,405
¥ 1,757,060
363,268
1,523
847,954
278,529
4,415,556
20,310,200
369,511
1,381,300
325,547
1,893,119
—
$ 10,846,570
5,118,092
1,457,719
6,567,026
2,064,372
38,804,131
154,930,178
3,023,509
9,805,085
2,870,386
13,312,526
3,072,625
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥30,363,196
¥31,943,567
$251,872,219
LIABILITIES
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Call Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowed Money . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign Exchanges. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserve for Possible Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserve for Possible Losses on Collateralized Real Estate Loans Sold . . .
Reserve for Retirement Allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Convertible Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acceptances and Guarantees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land Revaluation Reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred Tax Liabilities Relating to Land Revaluation . . . . . . . . . . . . . . .
¥20,771,122
2,164,371
395,869
1,256,856
120,903
2,003,214
264,137
68,406
34,691
3
1,799
1,604,825
—
65,853
¥21,843,726
1,606,364
371,130
1,984,560
115,903
2,298,679
795,688
74,722
34,392
3
1,799
1,893,119
145,047
—
$172,302,962
17,954,135
3,283,857
10,426,014
1,002,928
16,617,288
2,191,099
567,449
287,773
25
14,923
13,312,526
—
546,271
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28,752,049
31,165,132
238,507,250
STOCKHOLDERS’ EQUITY
Capital Stock:
Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Land Revaluation Reserve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earned Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
372,969
350,000
649,032
67,969
92,372
78,805
311,972
50,000
288,035
61,675
—
66,753
3,093,894
2,903,360
5,383,924
563,824
766,255
653,712
Total Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,611,147
778,435
13,364,969
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥30,363,196
¥31,943,567
$251,872,219
Non-Consolidated Statements of Operations Information
Thousands of
U.S. Dollars
(Note 1)
Millions of Yen
1999
1998
1999
INCOME
Interest on:
Loans and Discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Operating Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 468,181
85,686
327,696
58,287
12,208
121,154
164,068
¥ 513,137
110,757
300,865
60,111
9,262
113,354
265,858
$ 3,883,708
710,792
2,718,341
483,509
101,269
1,005,010
1,360,996
Total Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,237,280
1,373,344
10,263,625
EXPENSES
Interest on:
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings and Rediscounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Operating Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and Administrative Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for Possible Loan Losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
232,158
58,970
286,516
17,602
—
68,617
244,774
116,604
525,809
326,720
50,422
244,206
17,675
2,319
29,879
253,433
304,323
138,474
1,925,823
489,174
2,376,740
146,014
—
569,200
2,030,477
967,267
4,361,750
Total Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,551,050
1,367,451
12,866,445
(Loss) Income before Income Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(313,770)
5,893
(2,602,820)
Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(128,048)
215
(1,062,198)
Net (Loss) Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ (185,722)
5,678
$ (1,540,622)
¥
Yen
Per Share of Common Stock:
Net (Loss) Income per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
U.S. Dollars
¥(93.21)
¥1.10
$(0.77)
Non-Consolidated Earned Surplus Information
Millions of Yen
Thousands of
U.S. Dollars
(Note 1)
1999
1998
1999
Balance, Beginning of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment of Retained Earnings for Newly
Applied Accounting for Tax Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Margin with Tosho Co., Ltd. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer to Legal Reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends — Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (Loss) Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 66,753
¥73,517
$ 553,737
234,181
887
(6,268)
(31,026)
(185,722)
—
—
(2,100)
(10,342)
5,678
1,942,604
7,358
(51,995)
(257,370)
(1,540,622)
Balance, End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 78,805
¥66,753
$ 653,712
Non-Consolidated Cash Flows Information
1999
OPERATING ACTIVITIES:
Net (Loss) Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to Reconcile Net (Loss) Income to Net Cash
Provided by Operating Activities:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for Reserve for Possible Loan Losses . . . . . . . . . . . . . . . . . . . . .
Provision for Reserve for Possible Losses on Collateralized
Real Estate Loans Sold. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for (Reversal of) Reserve for Retirement Allowances . . . . . . .
Reversal of Other Reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Loss on Revaluation of Trading Assets and Liabilities . . . . . . . . . . . .
Benefit for Deferred Income Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Gain on Sales and Maturities of Securities . . . . . . . . . . . . . . . . . . . . . .
Loss on Sales and Exchange of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Gain on Sales Dispositions of Premises and Equipment . . . . . . . . . .
Decrease in Trading Account Securities . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (Increase) in Trading Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Increase) Decrease in Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (Increase) in Trading Liabilities. . . . . . . . . . . . . . . . . . . . . . . . . . .
(Decrease) Increase in Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other — Net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thousands of
U.S. Dollars
(Note 1)
Millions of Yen
¥ (185,722)
1998
¥
1999
5,678
$ (1,540,622)
15,734
116,604
15,299
304,323
10,089
299
—
10,338
(370,405)
(103,652)
451,407
(357)
—
631,926
204,324
(561,226)
(290,465)
238,192
1,385
(562)
(17,215)
7,455
—
(205,832)
59,315
(54,161)
46,813
(486,226)
(399,203)
1,947
1,495,826
(230,505)
83,691
2,480
—
85,757
(3,072,625)
(859,826)
3,744,562
(2,961)
—
5,242,024
1,694,932
(4,655,545)
(2,409,498)
1,975,877
Total Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
352,808
538,659
2,926,653
Net Cash Provided by Operating Activities . . . . . . . . . . . . . . . . . . . . . . .
167,086
544,337
1,386,031
INVESTING ACTIVITIES:
Purchases of Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from Sales and Maturities of Securities . . . . . . . . . . . . . . . . . . . . .
Increase in Call Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Increase) Decrease in Commercial Paper
and Other Debt Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Increase) Decrease in Money Held in Trust . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in Loans and Bills Discounted. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease (Increase) in Premises and Equipment. . . . . . . . . . . . . . . . . . . . . .
130,518
967,267
(4,837,886)
4,679,256
(253,718)
(5,274,847)
5,822,282
(271,331)
(40,131,779)
38,815,894
(2,104,670)
(174,205)
29,669
517,400
(22,677)
8,997
(69,837)
52,566
46,870
(1,445,085)
246,113
4,291,995
(188,113)
Net Cash (Used in) Provided by Investing Activities . . . . . . . . . . . . . . . . .
(62,161)
314,700
FINANCING ACTIVITIES:
Issuance of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase (Decrease) in Call Money. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from Subordinated Borrowed Money . . . . . . . . . . . . . . . . . . . . . .
Repayments of Subordinated Borrowed Money . . . . . . . . . . . . . . . . . . . . .
(Decrease) Increase in Other Borrowed Money . . . . . . . . . . . . . . . . . . . . . . .
Increase in Commercial Paper. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redemption of Convertible Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
718,896
(1,072,604)
558,007
43,000
(72,455)
(756,249)
58,000
—
(31,026)
—
(706,387)
(1,594,045)
332,054
(24,820)
88,120
—
(17,620)
(10,342)
5,963,467
(8,897,586)
4,628,843
356,698
(601,037)
(6,273,322)
481,128
—
(257,370)
Net Cash Used in Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(554,431)
(1,933,040)
(4,599,179)
Net Decrease in Cash and Due from Banks . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and Due from Banks, Beginning of Year. . . . . . . . . . . . . . . . . . . . . . . . . .
(449,506)
1,757,060
(1,074,003)
2,831,063
(3,728,793)
14,575,363
(515,645)
Cash and Due from Banks, End of Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,307,554
¥1,757,060
$10,846,570
ADDITIONAL CASH FLOW INFORMATION:
Interest Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income Taxes Paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 497,330
2,187
¥ 718,591
966
$ 4,125,508
18,142
26. DERIVATIVE INFORMATION OF THE PARENT COMPANY
The Parent Company uses various derivative financial instruments. As a result of adoption of mark-tomarket accounting for trading purpose transactions
from April 1, 1997, the purposes are clearly separated
into two types as follows:
To manage market risk, the Parent Company uses a
Value at Risk (“VaR”) analysis. VaR is a means of statistically analyzing past market conditions and trends to
estimate the maximum amount of capital at risk at a
particular time. VaR of the Parent Company and certain subsidiaries for the years ended March 31, 1999
and 1998, was estimated as follows:
Banking Purpose Transactions
These transactions are entered into to adjust portfolio of assets and liabilities and to hedge and reduce
the exposure to fluctuation in market rates.
Trading Purpose Transactions
These transactions are entered into to meet the
financing needs of the Parent Company’s customers
and to seek to capture gains from short-term changes
in market rate and other market related indices or
from gaps among markets within the proper risk
limits.
Derivatives are subject to credit risk and market
risk. Credit risk is the possibility that a loss may result
from a counterparty’s failure to perform according to
the terms and conditions of contract. Market risk is
the exposure created by potential fluctuations in market conditions, including interest rate, equity price or
forward exchange rate.
The amounts of credit risk exposure of the Parent
Company and certain subsidiaries, at March 31, 1999
and 1998, are estimated as follows:
Billions of Yen
Millions of
U.S. Dollars
1999
1998
1999
Interest rate swap . . . . . . . . . . . . . .
Currency swap . . . . . . . . . . . . . . . . .
Foreign exchange forward
contract. . . . . . . . . . . . . . . . . . . . . .
Interest rate option purchased . .
Currency option purchased . . . . .
Other derivative instruments . . . .
Netting effect. . . . . . . . . . . . . . . . . .
¥822
87
¥671
124
$6,819
722
249
19
16
25
(691)
566
27
96
18
(687)
2,066
158
133
206
(5,732)
Total. . . . . . . . . . . . . . . . . . . . . . .
¥527
¥815
$4,372
Billions of Yen
Millions of
U.S. Dollars
1999
1998
1999
Maximum. . . . . . . . . . . . . . . . . . . . . . ¥6.8
Minimum . . . . . . . . . . . . . . . . . . . . . .
1.0
Average . . . . . . . . . . . . . . . . . . . . . . .
2.8
¥8.7
2.8
5.1
$56
8
23
The VaR is measured in accordance with guidelines
of Bank for International Settlements (BIS), which call
for a holding period of ten business days and a 99%
confidence interval for both 1999 and 1998.
Credit risk of each individual counterparty is measured through the credit line approved by the credit
division. The Parent Company also periodically oversees the overall costs, which would be necessary to
contract the transactions on the same conditions if a
counterparty defaults.
For monitoring market risk, risk limits of the Parent
Company are approved by the executive committee.
Derivative transactions entered into by the Parent
Company have been made in accordance with internal
policies which regulate the authorization. The procedures to control and monitor market risk also include
daily review of both risk positions for compliance with
policy limits or regulations and profit, which is conducted by the Risk Management Division which is independent from the divisions interfacing markets.
The Parent Company has the following derivatives
contracts, which are quoted on listed exchanges, outstanding at March 31, 1999 and 1998:
Thousands of
U.S. Dollars
Millions of Yen
1999
Contract or
Notional
Amount
Banking Transactions
Interest rate contracts:
Futures written . . . . . . . . . . . . . . . . . . . . . . . . . .
Futures purchased . . . . . . . . . . . . . . . . . . . . . . .
Options written . . . . . . . . . . . . . . . . . . . . . . . . . .
Options purchased . . . . . . . . . . . . . . . . . . . . . . .
1998
Fair Value
Contract or
Notional
Amount
¥4,514,164
3,056,337
—
241,100
¥4,520,124
3,059,704
—
157
Bonds contracts:
Futures written . . . . . . . . . . . . . . . . . . . . . . . . . .
953,309
827,837
Equity contracts:
Futures written . . . . . . . . . . . . . . . . . . . . . . . . . .
1999
Fair Value
Contract or
Notional
Amount
Fair Value
¥ 5,181,899
5,124,356
250,236
84,021
¥ 5,195,591
5,136,418
68
—
$37,446,404
25,353,273
—
2,000,000
$37,495,844
25,381,203
—
1,302
948,842
820,748
313,769
424,821
313,487
422,638
7,907,997
6,867,167
7,870,942
6,808,362
—
—
—
—
11,402
2,917
11,736
2,934
—
—
—
—
Trading Transactions
Futures written . . . . . . . . . . . . . . . . . . . . . . . . . .
Options written . . . . . . . . . . . . . . . . . . . . . . . . . .
Options purchased . . . . . . . . . . . . . . . . . . . . . . .
4,616,209
4,578,895
2,217,731
3,744,590
4,619,053
4,581,936
1,039
1,521
13,660,234
13,301,493
3,172,040
3,545,623
13,677,233
13,320,212
342
683
38,292,899
37,983,368
18,396,773
31,062,547
38,316,491
38,008,594
8,619
12,617
Bonds contracts:
Futures written . . . . . . . . . . . . . . . . . . . . . . . . . .
Futures options written . . . . . . . . . . . . . . . . . .
Futures options purchased. . . . . . . . . . . . . . . .
93,456
105,619
18,235
24,235
93,346
105,683
9
23
148,247
114,545
33,792
37,510
148,169
114,364
105
128
775,247
876,143
151,265
201,037
774,334
876,674
75
191
Foreign Exchange—Futures Purchased . . . . . .
292
—
—
—
2,422
—
The Parent Company has the following derivatives
contracts, which are not quoted on listed exchanges,
outstanding at March 31, 1999 and 1998:
Thousands of
U.S. Dollars
Millions of Yen
1999
Contract or
Notional
Amount
Banking Transactions
Forward rate agreements written . . . . . . . . . .
Forward rate agreements purchased . . . . . . .
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . .
Cap written . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cap purchased . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floor written. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floor purchased . . . . . . . . . . . . . . . . . . . . . . . . . .
Other written . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
2,500
24,110
42,643,918
1,307,030
12,376
412,085
36,165
321,029
Bonds Contracts:
OTC options written . . . . . . . . . . . . . . . . . . . . . .
OTC options purchased. . . . . . . . . . . . . . . . . . . .
100,000
100,000
Foreign exchange:
Currency swaps . . . . . . . . . . . . . . . . . . . . . . . . . .
2,609,003
Trading Transactions
Forward rate agreements written . . . . . . . . . .
Forward rate agreements purchased . . . . . . .
Interest rate swaps . . . . . . . . . . . . . . . . . . . . . . .
Cap written . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cap purchased . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floor written. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Floor purchased . . . . . . . . . . . . . . . . . . . . . . . . . .
Other written . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other purchased . . . . . . . . . . . . . . . . . . . . . . . . .
2,647,383
2,223,069
42,910,543
1,673,279
2,142,498
988,432
995,637
177,076
125,100
Foreign exchange:
Forward exchange contracts written . . . . . . .
Forward exchange contracts purchased . . . .
3,337,616
4,431,129
Currency swaps . . . . . . . . . . . . . . . . . . . . . . . . . .
Options written . . . . . . . . . . . . . . . . . . . . . . . . . .
Options purchased. . . . . . . . . . . . . . . . . . . . . . . .
836,012
369,238
336,047
The contracts or notional amounts of derivatives
which are shown in the above table do not represent the amounts exchanged by the parties and do
not measure the Parent Company’s exposure to
credit or market risk.
Derivative transactions for trading purposes are
stated at market value in the accompanying financial statements.
1998
Fair Value
¥
(0)
(5)
13,616
(4,947)
(12)
(1,658)
123
(1,211)
4,321
—
Contract or
Notional
Amount
¥
155,000
62,178
30,116,037
149,130
6,577
63,071
2,000
300,688
1999
Fair Value
¥
557
(186)
(20,766)
(184)
(16)
(80)
47
(678)
Contract or
Notional
Amount
$
20,738
200,000
353,744,654
10,842,223
102,663
3,418,374
300,000
2,663,036
Fair Value
$
(0)
(41)
112,949
(41,037)
(100)
(13,754)
1,020
(10,046)
—
—
—
—
829,531
829,531
(1,625)
785,208
794
21,642,497
(13,480)
3,116
(2,693)
(6,662)
(2,818)
1,868
(7,329)
9,863
(3,366)
756
3,095,264
3,452,536
40,684,077
1,513,428
1,725,338
1,078,866
484,328
91,881
22,006
1,205
(2,533)
(3,828)
(2,273)
2,514
(1,750)
3,228
(3,001)
424
21,960,871
18,441,054
355,956,392
13,880,373
17,772,692
8,199,353
8,259,121
1,468,901
1,037,744
25,848
(22,339)
(55,263)
(23,376)
15,496
(60,796)
81,817
(27,922)
6,271
—
—
(3,795)
—
—
4,737,309
10,436,066
830,264
3,535,942
3,220,091
—
—
(3,444)
—
—
27,686,570
36,757,603
6,934,981
3,062,645
2,787,615
35,844
—
—
—
(31,481)
—
—
INDEPENDENT AUDITORS’ REPORT
To the Board of Directors and Stockholders of
The Tokai Bank, Limited:
We have examined the consolidated balance sheets of The Tokai Bank, Limited and consolidated subsidiaries as of March 31, 1999 and 1998, and the related consolidated statements of operations, earned surplus, and cash flows for the years then ended, all expressed in Japanese yen.
Our examinations were made in accordance with auditing standards, procedures and practices
generally accepted and applied in Japan and, accordingly, included such tests of the accounting records and such other auditing procedures as we considered necessary in the circumstances.
In our opinion, the consolidated financial statements referred to above present fairly the financial position of The Tokai Bank, Limited and consolidated subsidiaries as of March 31, 1999 and
1998, and the results of their operations and their cash flows for the years then ended in conformity with accounting principles and practices generally accepted in Japan applied on a consistent basis.
Our examinations also comprehended the translation of Japanese yen amounts into U.S. dollar
amounts and, in our opinion, such translation has been made in conformity with the basis stated in Note 1. Such U.S. dollar amounts are presented solely for the convenience of readers outside Japan.
June 29, 1999
ADDITIONAL NON-CONSOLIDATED FINANCIAL INFORMATION
Gross Business Profit
Gross business profit decreased ¥25.5 billion to ¥415.4 billion. In domestic operations,
the domestic gross interest margin improved 0.03 percentage points to 0.23 percent, supporting a ¥7.4 billion increase in interest income. However, other operating income
decreased ¥34.4 billion due to a decline in bond related profit. Earnings from domestic
operations declined ¥23.8 billion as a result. In international operations, other operating
income increased by ¥3.5 billion, but a ¥5.5 billion decrease in interest income led to a
decrease of ¥1.7 billion in earnings from international operations. Excluding the ¥32.9 billion decrease in bond related profit to ¥38.9 billion, gross business profit would have
increased by ¥7.4 billion.
Operating Expenses
Expenses (except non-recurring expenses) decreased ¥9.8 billion to ¥239.6 billion. Main
reasons included a ¥6.9 billion reduction in personnel expenses because of personnel
reductions, a freeze on base salaries and cuts in bonuses. Moreover, supplies expenses
were reduced ¥1.4 billion through means such as revising procurement practices.
Net Business Profit
With the drop in bond related profit, the gain in interest income and the decrease in
expenses, net business profit, excluding addition to the general reserve, was ¥175.8 billion,
down ¥15.8 billion year-on-year.
Non-Recurring Profit/Loss
Stock related profit decreased ¥90.3 billion to ¥64.8 billion. Of this total, profit from
sales of stocks decreased ¥55.5 billion to ¥117.0 billion. This is because, in the first half
there was a profit of ¥111.8 billion, mainly due to a realized profit of ¥109.9 billion from
sales of stock holdings. Loss from sales of stocks increased by ¥23.1 billion, primarily
because of losses booked in connection with the unwinding of cross-shareholdings. Loss
on devaluation of stocks increased by ¥11.7 billion, mainly because of lower share prices.
Composition of Profit/Loss
(yen billions)
1999
Gross business profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥415.4
Earnings from domestic operations . . . . . . . . . . . . . . . . . . . . . 345.4
1998
¥440.9
369.2
Change
¥ (25.5)
(23.8)
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Gross interest margin] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings from international operations . . . . . . . . . . . . . . . . . .
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trading income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses (except non-recurring expenses) . . . . . . . . . . . . . . .
Personnel expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Supplies expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net business profit (excluding addition to general reserve)
Credit related charges (addition to general reserve) . . . . . . .
Net business profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-recurring profit/loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock related profit/loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit related charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income before income taxes and others . . . . . . . . . . . . . . . . .
Extraordinary profit/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit related charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit/loss from disposal of real estate . . . . . . . . . . . . . . . . .
Income/loss before income taxes . . . . . . . . . . . . . . . . . . . . . . .
Provision for corporate, inhabitants’ and business tax . . . . .
Income taxes deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash dividends per share of common stock (annual)(yen) . . .
277.8
[0.20]
36.4
(1.0)
56.0
71.7
30.2
6.1
8.0
27.5
249.4
117.4
115.6
191.5
18.5
173.0
(212.8)
155.1
372.8
(44.4)
50.3
21.1
54.2
5.9
0.2
—
5.7
8.5
7.4
[0.03]
0.6
2.6
(34.4)
(1.7)
(5.5)
(2.3)
2.7
3.5
(9.8)
(6.9)
(1.4)
(15.8)
(5.9)
(9.9)
(283.5)
(90.3)
192.1
(294.8)
(24.8)
(21.1)
(53.8)
(319.7)
2.7
—
191.4
(1.5)
285.3
[0.23]
37.0
1.6
21.6
70.0
24.7
3.7
10.7
31.0
239.6
110.6
114.2
175.8
12.7
163.1
(496.3)
64.8
564.9
(339.3)
25.5
—
0.4
(313.8)
2.9
(130.9)
(185.7)
7.0
Bond & Stock Related Profit/Loss
Bond related profit/loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock related profit/loss. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit from sales of stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from sales of stocks . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on devaluation of stocks . . . . . . . . . . . . . . . . . . . . . . . . .
(yen billions)
1999
¥ 38.9
64.8
117.0
34.5
17.7
1998
¥ 71.8
155.1
172.5
11.4
6.0
Change
¥(32.9)
(90.3)
(55.5)
23.1
11.7
Credit Related Charges
Credit related charges exceeded the level of the fiscal year ended March 31, 1998 in
totaling ¥577.6 billion, with ¥12.7 billion under net business profit and ¥564.9 billion under
non-recurring profit/loss. During the fiscal year ended March 31, 1999, amid the continuing weak economic conditions in Japan, the Bank moved to protect future asset quality
and implemented measures for the final disposal of problem loans in line with The
Viewpoint on the Write-Offs and Allowances in Association with the Capital Injection promulgated by the Financial Reconstruction Commission and assessments in accordance
with the Financial Inspection Manuals. Separately, we also implemented a rigorous selfassessment.
Credit Charges Under Net Business Profit
Credit charges under net business profit of ¥12.7 billion consisted of addition to the
general reserve.
For sub-standard loans, the Bank sets aside approximately 15 percent for the portion
not covered by collateral or guarantees. Given the extended economic weakness of the
past two to three years and the resulting deterioration of the Bank’s loan portfolio, Tokai
Bank employed highly conservative values for expected credit loss ratios in moving to protect future asset quality.
For other loans to borrowers under watch, and for normal loans, the bank sets aside
reserves based on an appropriate percentage of actual credit losses using the average
loan maturity for each internal credit rating category.
Credit Charges Under Non-Recurring Profit/Loss
In the fiscal year ended March 31, 1999, disposal of problem loans under non-recurring
profit/loss totaled ¥564.9 billion. The extended economic malaise both domestically and
overseas had caused further deterioration of the Bank’s domestic loan portfolio and
increased credit risk overseas, primarily in Asia. Moreover, the Bank is actively working to
complete the disposal of problem loans and remove them from the balance sheet.
For bankrupt and quasi-bankrupt claims, the Bank set aside 100 percent coverage
through collateral, guarantees and reserves. For doubtful claims, the Bank set aside
reserves for about 70 percent, excluding the portion which is covered by collateral and
guarantees.
Charge-off of loans, including specific provision, totaled ¥307.4 billion, due mainly to
large-scale bankruptcies. Loss from sales of loans totaled ¥59.8 billion, reflecting the
Bank’s efforts to move problem loans off the balance sheet. Of this total, ¥27.1 billion was
loss from sales of loans to the Cooperative Credit Purchasing Company, Ltd., with the
remaining ¥32.7 billion coming from moves such as bulk sales of loans (loss from sales of
loans reserved). The principal sold to the Cooperative Credit Purchasing Company was
¥58.9 billion, and bulk sales totaled ¥290.4 billion. In addition, waiver of claims related to
Fujita Corporation, Towa Real Estate and others totaled ¥179.4 billion. With the worsening
economic environment in many Asian countries contributing to increased country risk,
the Bank added ¥8.1 billion to the specific reserve for overseas losses, mostly for the credits outstanding in lndonesia, following revisions to policies for setting aside reserves for
selected countries in June 1998. In the fiscal year ending March 31, 2000, the Bank will continue disposing of problem loans through means such as bulk sales.
Problem Loans
Loans under risk monitor at March 31, 1999 totaled ¥476.0 billion after partial direct
charge-offs, and accounted for 2.5 percent of total loans. The reserve ratio for problem
loans stood at 55.4 percent. Before partial direct charge-offs, loans under risk monitor represented 4.0 percent of loans and bills discounted, and the reserve ratio stood at 83.5 percent, representing a significant improvement from September 30, 1998 achieved through
recovery of claims and sales of loans.
Disclosed according to Article 7 of the Law concerning Emergency Measures for the
Reconstruction of the Function of the Financial System, problem loans after partial direct
charge-offs totaled ¥753.2 billion and represented 3.6 percent of total credit extended.
The coverage ratio has improved significantly to 84.7 percent from September 30, 1998.
Credit Related Charges (Disposal of Problem Loans)
(yen billions)
1999
Credit charges under net business profit . . . . . . . . . . . . . . . . . ¥ 12.7
Addition to general reserve . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.7
Credit charges under non-recurring profit/loss . . . . . . . . . . .
Charge-off (including specific provision) . . . . . . . . . . . . . . .
Loss from sales of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss from sales of loans to CCPC . . . . . . . . . . . . . . . . . .
Loss from sales of loans reserved . . . . . . . . . . . . . . . . .
Loss from sales of overseas loans . . . . . . . . . . . . . . . . .
Waiver of claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Addition to reserves for possible losses on loan sales . . .
Specific reserve for overseas loan losses . . . . . . . . . . . . . . .
564.9
307.4
59.8
27.1
32.7
0
179.4
10.1
8.1
Credit charges under extraordinary profit/loss . . . . . . . . . . .
—
Loss from devaluation of investment in subsidiary . . . . . .
—
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥577.6
1998
¥ 18.5
18.5
Change
¥ (5.9)
(5.9)
372.8
310.8
19.2
9.1
3.2
6.9
40.3
7.9
(5.4)
192.1
(3.3)
40.6
18.0
29.5
(6.9)
139.1
2.2
13.5
21.1
21.1
¥412.4
(21.1)
(21.1)
¥165.2
Sale of Problem Loans
Year ended March 31, 1999
(yen billions)
Principal sold
Sales to CCPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 58.9
Sale of loans reserved and overseas loans . . . . . . . . . . . . . . . .
290.4
Loss from sales
¥27.1
32.7
Loans Under Risk Monitor
For the fiscal year ended March 1999, loans to borrowers in legal bankruptcy and overdue
loans decreased by ¥124.7 billion and ¥161.2 billion, respectively, after partial direct
charge-offs, compared with the method used previously.
As of March 31
1999
Loans to borrowers in
legal bankruptcy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥
72.6
Overdue loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
248.4
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
320.9
(Percentage of total loans). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1.7%)
Loans overdue for at least 3 months . . . . . . . . . . . . . . . . . . . . .
63.9
Loans with concessions in terms . . . . . . . . . . . . . . . . . . . . . . . .
91.2
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 476.0
(Percentage of total loans). . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2.5%)
Loans outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥18,676.8
(yen billions)
1998
¥
310.5
526.9
837.4
(4.1%)
150.8
233.4
¥ 1,221.6
(6.0%)
¥20,310.2
Notes:
1. As stipulated by corporate tax regulations, among loans for which unpaid interest is permitted to be omitted from
income, loans to borrowers in legal bankruptcy represent the loan principal amount for borrowers to which any of
the following apply:
a) Borrowers who have declared commencement of reorganization procedures in accordance with the
provisions of the Company Reorganization Law
b) Borrowers who have declared commencement of composition in accordance with the provisions of the
Composition Act
c) Borrowers who have declared bankruptcy in accordance with the provisions of the Bankruptcy Law
d) Borrowers who have declared commencement of adjustments or special liquidations in accordance with the
provisions of the Commercial Code
e) Borrowers whose clearinghouse transactions have been terminated (including banking syndicates that carry out
clearinghouse operations in regions where there are no clearinghouses)
f) Borrowers who are foreign governments, central banks or regional government bodies with loans whose value
has decreased markedly as a result of payment arrears over a long period of time, and whose repayment is
deemed extremely difficult
2. Overdue loans
Loans for which accrued interest has not been accounted for, excluding the loans to borrowers in legal
bankruptcy, and the loans for which interest payment has been temporarily suspended with the consent of the
lender for the purpose of restructuring the business of, or supporting, the borrower
3. Loans overdue at least three (3) months are loans for which payment of interest or principal has not been
received for at least three (3) months from the day after the contractual payment date, other than loans to
customers in legal bankruptcy or overdue loans.
4. Loans with concessions in terms are loans for which the Bank has made some concessions in terms beneficial to
the borrower, such as reduction or forgiveness of interest rate, suspension of interest payment or of principal
payment, or waiver of claims, for the purpose of restructuring the business of or supporting the borrower,
except for those falling under the definitions for overdue loans and loans overdue for at least three (3) months.
Problem Loans (After Partial Direct Charge-Offs) Under New Disclosure Standards
(Financial Reconstruction Law, Article 7)
Amount
Percentage of
(yen billions) total claims (%)
Bankrupt and quasi-bankrupt claims . . . . . . . . . . . . . . . . .
Doubtful claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Substandard claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Normal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥
215.5
426.8
111.0
¥ 753.2
19,964.8
¥20,718.1
1.0
2.1
0.5
3.6
96.4
100.0
Coverage
ratio (%)
100.0
86.3
49.0
84.7
—
—
Note: Implementation of Partial Direct Charge-Offs
Beginning from the fiscal year ended March 31, 1999, a specific reserve is provided for loans categorized
as Classification IV under the Bank’s self-assessment, even in cases not covered by tax laws. For these loans,
the Bank implements partial direct charge-offs, which amounted to ¥385.4 billion, equivalent to the
expected irrecoverable amount, in the fiscal year ended March 31, 1999.
Income Before Income Taxes and Net Income
Tokai Bank recorded a loss before income taxes and others of ¥339.2 billion, and a loss
before income taxes of ¥313.8 billion. The application of tax effect accounting beginning
in the fiscal year ended March 31, 1999 resulted in a total of ¥130.9 billion in income taxes
deferred for the year. Consequently, net loss totaled ¥185.7 billion. Cash dividends per
share of common stock decreased ¥1.50 to ¥7.00 because of the net loss.
Dividend Policy
Tokai Bank has adopted the policy of maintaining a stable dividend, while given its
mandate to serve the general public and economy, being also mindful of the need for an
adequate level of internal reserves to ensure sound management and long-term growth.
During the fiscal year ended March 31, 1999, however, the Bank’s results were negatively impacted, and so a substantial loss was reported.
To contain the depletion of internal reserves, the Bank reduced the interim dividend
per share of common stock to ¥2.75 from ¥4.25, and declared a cash dividend per share for
the year of ¥7.00. For preference shares, the Bank paid dividends of ¥68.75 for each first
preference share and ¥0.06, representing the dividend for March 31, 1999 only, for each
second and third preference share issued for the year.
Hereafter, the directors and employees of the Bank will make a concerted effort to
achieve overall progress and recovery, and by promptly achieving a recovery in the profit
level and building up internal reserves, we aim to achieve a stable dividend payout.
Assets and Liabilities
Total assets decreased ¥1,580.4 billion from a year earlier to ¥30,363.2 billion. The main
reasons for this decline were a decrease in loans and bills discounted, which resulted from
sales of loans to the Cooperative Credit Purchasing Company amounting to ¥58.9 billion,
bulk sales of loans amounting to ¥290.4 billion, actual recovery of some loans, waiver of
claims, direct charge-offs and the removal of nearly ¥1.2 trillion in problem loans from the
balance sheet, and the Bank’s reduction of overseas assets not associated with Japanese
customers. However, due to the application of tax effect accounting beginning the fiscal
year ended March 31, 1999, assets (deferred tax assets) have increased by ¥370.4 billion compared to the figure based on the method used in the past.
Total liabilities decreased ¥2,413.1 billion to ¥28,752.0 billion. A primary factor was the
reduction in overseas deposits as part of the Bank’s efforts to control assets and liabilities
overseas.
Assets & Liabilities
As of March 31
(yen trillions)
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans and bills discounted . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1999
¥30.4
18.7
1998
¥31.9
20.3
Change
¥(1.6)
(1.6)
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Overseas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15.9
2.8
28.8
18.5
15.9
2.6
16.7
3.6
31.2
19.9
15.5
4.3
(0.9)
(0.8)
(2.4)
(1.4)
0.3
(1.7)
Unrealized Profit/Loss on Listed Securities Held
As of March 31, 1999, unrealized profit on listed securities held totaled ¥195.4 billion.
This total represented a ¥57.2 billion decrease from a year earlier, mainly due to lower stock
prices, but was a significant turnaround from the ¥117.4 billion unrealized loss on listed
securities held as of September 30, 1998.
(yen billions)
1999
1998
Unrealized profit/loss on listed securities held . . . . . . . . . . . ¥ 195.4 ¥ 252.6
Unrealized profit on listed securities held . . . . . . . . . . . . . . 432.9
472.1
Unrealized loss on listed securities held . . . . . . . . . . . . . . . 237.6
219.5
Nikkei stock average (yen). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,836 16,527
Change
¥(57.2)
(39.2)
18.1
(691)
(For reference) Unrealized profit/loss on listed securities held for the interim period ended September 30, 1998,
was ¥117.4 billion (Nikkei stock average: ¥13,406).
Prices of Marketable Securities
As of March 31
(yen billions)
1999
1998
Book Value Market Value
Securities:
Bonds . . . . . . . . . . . . . . . . . . . .
Stocks . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . .
¥ 659.4
2,336.8
365.0
¥3,361.3
¥ 631.8
2,571.6
353.3
¥3,556.7
Book Value
Market Value
¥ 491.7
2,304.7
125.7
¥2,922.1
¥ 498.5
2,554.7
121.5
¥3,174.7
Notes:
1. The above table covers only listed trading securities (bonds include government bonds, regional
government bonds and corporate bonds). In most cases, the market prices of listed securities are
determined by using the closing prices on the Tokyo Stock Exchange. Additionally, market prices of
bonds as of March 31, 1999, may be calculated from yields announced by the
Securities Association of Japan.
2. The table below covers unlisted securities for which it is possible to estimate a market value.
As of March 31
(yen billions)
1999
1998
Book Value Market Value
Securities:
Bonds . . . . . . . . . . . . . . . . . . . .
Stocks . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . .
¥331.5
25.1
66.9
¥423.5
Book Value
¥333.8
31.9
66.3
¥431.9
Market Value
¥362.4
27.9
40.7
¥430.9
¥367.1
27.9
37.4
¥432.4
The market values of unlisted securities are determined as follows: transaction prices announced
by the Securities Association of Japan in the case of securities traded over-the-counter; prices calculated from
yields announced by the Securities Association of Japan in the case of bonds sold through public offering;
market prices announced by authorized fund management companies in the case of beneficiary securities and
in the case of securities investment trusts; and, transaction prices on the NASDAQ of the National Association
of Securities Dealers of the USA for securities traded over-the-counter in the USA.
3. ‘Bonds’, ‘stocks’ and ‘others’ in this table and Note 2 above correspond to the categories in the
balance sheets.
4. The table below shows the book values on the balance sheets for unlisted securities, which are not
subject to market price valuation disclosure as above.
As of March 31
(yen billions)
Securities
Unlisted bonds excluding public offerings . . . . . . . . . . . . . . . .
Unlisted public bonds redeemable within one year . . . . . . . .
Unlisted overseas bonds. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unlisted stocks for related companies . . . . . . . . . . . . . . . . . . .
Unlisted overseas stocks for related companies . . . . . . . . . . .
Beneficiary securities held in closed investment trusts . . . .
1999
1998
¥427.0
5.4
209.0
41.5
125.2
13.9
¥355.7
195.9
230.6
40.6
156.7
10.9
5. Trading securities and trading transaction securities, which are accounted in the trading accounts, are
revaluated at market prices, and the relevant profit or loss evaluations are reflected in the income
statement. This description is therefore omitted here.
Market Prices of Money Held in Trust
As of March 31
(yen billions)
1999
Money held in trust . . . . . . . . . .
Book Value
¥248.9
1998
Market Value
¥245.5
Book Value
¥278.5
Market Value
¥279.8
Notes:
Market values are determined using the prices reasonably calculated by the fiduciary of the investment trusts as
follows:
1. in most cases, the market values of listed securities are determined by using the closing prices on the Tokyo
Stock Exchange, or prices calculated from yields announced by the Securities Association of Japan in the case
of bonds sold through public offering.
2. For stocks registered on the over-the-counter market, market values are based on the transaction price as
announced by the Securities Association of Japan.
INCOME AND EXPENSES
(Non-Consolidated Basis)
Domestic and International Operating Income by Division
(yen billions)
Domestic operations
Category
1999
Interest income . . . . . . . . . . . . . . . . . . . . . . . .
1998
1999
¥584.7
¥403.3
300.3
378.6
417.6
689.8
277.8
284.4
46.0
45.5
9.6
9.0
36.4
36.4
0.8
1.8
(1.0)
73.6
72.2
17.6
41.7
56.0
30.5
369.2
351.3
1.68% 1.61%
24.7
12.0
8.3
3.7
10.7
0
10.7
45.8
14.8
31.0
70.0
1.33%
30.2
14.1
8.0
6.1
9.2
1.3
8.0
39.7
12.3
27.5
71.7
1.02%
42.4
14.3
6.9
7.4
¥483.0 ¥484.6
Interest expenses. . . . . . . . . . . . . . . . . . . . . . .
197.7
Net interest income . . . . . . . . . . . . . . . . . . . . . . .
Fee and commission income . . . . . . . . . . . . .
Fee and commission expenses . . . . . . . . . . .
Net fees and commissions . . . . . . . . . . . . . . . . .
Trading income . . . . . . . . . . . . . . . . . . . . . . . .
Trading expenses . . . . . . . . . . . . . . . . . . . . . . .
Net trading income . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . .
Other operating income, net . . . . . . . . . . . . . . .
Gross business profit . . . . . . . . . . . . . . . . . . . . . .
Gross business profit margin. . . . . . . . . . . . . . .
285.3
46.3
9.3
37.0
3.6
2.1
1.6
75.4
53.8
21.6
345.4
1.56%
International operations
1997
206.8
1998
1997
¥447.8 ¥732.3
46.3
33.1
13.2
63.0
0.86%
Total
1999
1998
¥881.6
4.7
571.6
4.7
309.9
58.3
17.6
40.7
12.2
—
12.2
121.2
68.6
52.5
415.4
1.56%
1997
¥924.8 ¥1,312.4
7.6
4.6
616.7
985.6
7.6
4.6
308.0
326.8
60.1
59.7
17.7
15.9
42.4
43.8
9.3
2.3
6.9
113.4
118.5
29.9
74.8
83.5
43.7
440.9
414.4
1.58%
1.45%
Notes:
1. Domestic operations include yen-denominated transactions at domestic branches. International operations include foreign-currency transactions at domestic branches and transactions at overseas branches. International operations also include yen-denominated transactions for
non-residents and transactions in Tokyo special offshore accounts (International Banking Facility (IBF)).
2. “Interest expenses” are shown after deduction of an amount equivalent to interest expenses on money held in trust (1997: ¥5.0 billion, 1998: ¥4.6
billion, 1999: ¥6.0 billion).
3. The figures in the lower row under ‘Total’ for ‘Interest Income’ and ‘Interest expenses’ indicate the interest from lending and borrowing
between domestic operations and international operations.
4. For ‘Trading income’ and ‘Trading expenses’, the net figures are shown for each of the categories ‘Income (Expenses) from trading-related financial derivatives transactions’ and ‘Other trading income (expenses)’ under ‘Domestic operations’, ‘International operations’ and ‘Total’ columns.
5. Gross business profit margin = (Gross business profit/Average balance of interest-earning assets) × 100
Interest-Earnings Assets and Liabilities, Interest Rate and Yield
Domestic Operations
Year ended March 31
(yen billions)
1999
Categories
Interest-earning assets . . . . . . . . . . . . . . . .
Loans and bills discounted . . . . . . . . . . .
Trading account securities . . . . . . . . . . .
Securities . . . . . . . . . . . . . . . . . . . . . . . . . .
Call loans . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills purchased . . . . . . . . . . . . . . . . . . . . .
Due from banks . . . . . . . . . . . . . . . . . . . . .
Interest-bearing liabilities . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . . .
Negotiable certificates of deposit . . . . .
Call money . . . . . . . . . . . . . . . . . . . . . . . . .
Bills sold . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . . . .
Borrowed money . . . . . . . . . . . . . . . . . . .
Average
balance
1998
Simple
interest
Yield
(%)
Average
balance
¥22,112.1
(819.4)
17,111.5
¥483.0
(4.7)
329.8
2.18
3,877.0
10.8
129.7
158.7
20,482.0
15,256.1
2,419.0
2,016.5
226.7
74.7
651.1
56.8
0,1
0.5
1.5
197.7
61.7
14.5
11.5
1.1
0.4
18.8
1.46
0.54
0.40
0.94
0.96
0.40
0.60
0.57
0.47
0.49
2.88
1.92
1997
Simple
interest
Yield
(%)
Average
balance
¥21,951.7
(1,197.7)
16,748.8
¥484.6
(7.6)
334.0
2.20
3,830.0
18.2
5.7
149.7
20,714.4
14,883.1
2,320.6
2,089.3
309.7
73.5
0.2
0.1
1.2
206.8
72.7
14.8
10.7
1.9
1.91
0.86
0.99
0.83
0.99
0.48
0.63
0.51
0.62
¥21,786.7
(657.0)
16,626.1
37.4
3,850.4
84.0
1.0
433.2
21,055.2
14,479.5
2,244.7
2,811.0
449.4
1,276.8
23.3
1.82
1.99
1,141.6
Simple
interest
Yield
(%)
¥584.7
(4.6)
350.2
1.3
88.6
0.5
0
2.8
300.3
84.5
12.3
13.8
2.2
2.68
23.3
2.10
3.60
2.30
0.60
0.49
0.64
1.42
0.58
0.54
0.48
0.49
2.03
Notes:
1. “Interest-earning assets” are shown after deduction of the average balance of non-interest-earnings due from banks (1997: ¥184.8 billion, 1998:
¥191.5 billion, 1999: ¥196.5 billion). “Interest-bearing liabilities” are shown after deduction of an amount equivalent to the average balance of
money held in trust (1997: ¥189.5 billion, 1998: ¥221.1 billion, 1999: ¥209.9 billion) and interest (1997: ¥2.7 billion, 1998: ¥2.2 billion, 1999: ¥2.0 billion).
2. Figures in parentheses indicate the average balances of lending and borrowings or interest payments made between domestic and international
operations.
International Operations
(yen billions)
1999
1998
1997
Categories
Average
balance
Simple
interest
Yield
(%)
Average
balance
Simple
interest
Yield
(%)
Average
balance
Simple
interest
Yield
(%)
Interest-earning assets .................................
Loans and bills discounted .......................
Trading account securities.......................
Securities .....................................................
Call loans ......................................................
Bills purchased ...........................................
Due from banks ..........................................
¥5,256.9
3,151.6
¥403.3
136.2
7.67
4.32
¥6,987.3
4,060.1
¥447.8
174.7
6.40
4.30
756.7
42.1
—
914.5
28.9
2.1
—
33.0
3.81
4.97
—
3.60
789.2
75.7
—
1,659.8
37.2
4.2
—
52.3
4.71
5.55
—
3.14
¥7,257.8
3,897.1
—
719.5
95.9
—
2,093.2
¥732.3
159.3
—
36.6
5.3
—
63.0
10.08
4.08
—
5.08
5.49
—
3.00
5,197.7
(819.4)
3,574.9
102.8
104.2
—
—
549.9
378.6
(4.7)
149.1
6.9
5.5
—
—
21.7
7.28
7,002.2
(1,197.7)
4,922.8
280.4
120.2
—
417.6
(7.6)
221.3
18.0
6.1
—
5.96
Interest-bearing liabilities ............................
Deposits .......................................................
Negotiable certificates of deposit ..........
Call money ...................................................
Bills sold .......................................................
Commercial paper .....................................
Borrowed money .......................................
4.17
6.66
5.23
—
—
3.95
384.0
8.3
4.49
6.41
5.10
—
7,262.3
(657.0)
5,780.8
249.1
126.7
—
2.17
299.7
689.8
(4.6)
222.8
14.6
6.3
—
7.6
9.49
3.85
5.84
4.99
—
2.52
Notes:
1. “Interest-earning assets” are shown after deduction of the average balance of non-interest earnings due from banks (1997: ¥8.0 billion, 1998: ¥7.8
billion, 1999: ¥7.1 billion). “Interest-bearing liabilities” are shown after deduction of an amount equivalent to the average balance of money held
in trust (1997: ¥23.8 billion, 1998: ¥40.5 billion, 1999: ¥54.8 billion) and interest (1997: ¥2.3 billion, 1998: ¥2.4 billion, 1999: ¥4.0 billion).
2. Figures in parentheses indicate the average balances of lending and borrowings or interest payments made between domestic and international
operations.
3. The average balance of foreign-currency-denominated transactions at domestic branches included in international operations are calculated
using the current month method (the telegraphic transfer rate at the end of the prior month is applied to non-exchange transactions).
Total
(yen billions)
1999
Categories
Interest-earning assets .................................
Loans and bills discounted .......................
Trading account securities.......................
Securities .....................................................
Call loans ......................................................
Bills purchased ...........................................
Due from banks ..........................................
Interest-bearing liabilities ............................
Deposits .......................................................
Negotiable certificates of deposit ..........
Call money ...................................................
Bills sold .......................................................
Commercial paper .....................................
Borrowed money .......................................
1998
1997
Average
balance
Simple
interest
Yield
(%)
Average
balance
Simple
interest
Yield
(%)
¥26,549.5
20,263.1
¥881.6
466.0
3.32
2.29
¥27,741.3
20,808.9
¥924.8
508.8
3.33
2.44
4,633.7
52.9
129.7
1,073.3
24,860.3
18,831.1
2,521.8
2,120.7
226.7
74.7
1,201.0
85.7
2.2
0.5
34.5
571.6
210.8
21.4
17.0
1.1
0.4
40.5
1.84
4.07
0.40
3.21
2.29
1.11
0.84
0.80
0.47
0.49
3.37
4,619.2
93.9
5.7
1,809.6
26,518.8
19,805.9
2,601.0
2,209.5
309.7
110.8
4.4
0.1
53.5
616.7
294.0
32.7
16.9
1.9
2.39
4.64
0.99
2.95
2.32
1.48
1.25
0.76
0.62
1,660.7
31.6
1.90
Average
balance
Simple
interest
Yield
(%)
¥28,387.5 ¥1,312.4
20,523.2
509.5
37.4
1.3
4,569.9
125.2
179.9
5.8
1.0
0
2,526.4
65.7
27,660.5
985.6
20,260.3
307.3
2,493.8
26.9
2,937.7
20.1
449.4
2.2
4.62
2.48
3.60
2.74
3.21
0.49
2.60
3.56
1.51
1.07
0.68
0.49
1,441.4
30.8
2.13
Notes:
1. “Interest-earning assets” are shown after deduction of the average balance of non-interest earnings due from banks (1997: ¥192.8 billion, 1998:
¥199.3 billion, 1999: ¥203.6 billion). “Interest-bearing liabilities” are shown after deduction of an amount equivalent to the average balance of
money held in trust (1997: ¥213.3 billion, 1998: ¥261.6 billion, 1999: ¥264.7 billion) and interest (1997: ¥5.0 billion, 1998: ¥4.6 billion, 1999: ¥6.0 billion).
2. The average balance and interest from lending and borrowing between domestic operations and international operations are shown on a net
basis.
Interest Received and Paid
Domestic Operations
(yen billions)
1999
1998
1997
Categories
Interest received . . . . . . . . . . . . . . . . . . . . .
Loans and bills discounted . . . . . . . . . .
Trading account securities . . . . . . . . . .
Securities . . . . . . . . . . . . . . . . . . . . . . . . .
Call loans. . . . . . . . . . . . . . . . . . . . . . . . . .
Bills purchased . . . . . . . . . . . . . . . . . . . .
Due from banks . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . .
Negotiable certificates of deposit. . . .
Call money . . . . . . . . . . . . . . . . . . . . . . . .
Bills sold . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . . .
Borrowed money . . . . . . . . . . . . . . . . . .
Volumerelated
Raterelated
Net
change
Volumerelated
Raterelated
Net
change
Volumerelated
¥ 3.5
7.1
¥ (5.2)
(11.3)
¥ (1.7)
(4.2)
¥ 4.4
2.6
¥(104.5)
(18.7)
¥(100.1)
(16.2)
0.9
(0.1)
0.5
0.1
(17.6)
(0)
(0.1)
0.2
(16.7)
(0.1)
0.5
0.3
(0.5)
(0.5)
0
(2.2)
(14.7)
0.2
0
0.7
(15.1)
(0.4)
0.1
(1.5)
¥ 8.4
0
0.1
1.8
(0.6)
(0.3
2.1
(2.3)
1.8
0.6
(0.4)
(0.5)
0.4
(14.4)
(6.8)
(12.8)
(0.9)
1.2
(0.4)
—
10.0
(9.1)
(11.0)
(0.2)
0.8
(0.9)
0.4
(4.5)
(4.8)
2.3
0.4
(3.7)
(0.8)
(88.7)
(14.1)
2.0
0.7
0.5
(93.5)
(11.8)
2.5
(3.0)
(0.3)
3.4
0.5
1.0
(0.4)
(1.1)
(81.4)
(72.4)
(8.5)
(8.9)
(1.5)
(77.9)
(72.0)
(7.5)
(9.3)
(2.6)
2.6
(2.6)
5.8
(7.2)
(1.4)
0
Raterelated
Net
change
¥(115.2) ¥(106.8)
(86.3)
(86.3)
0.3
0.4
(25.7)
(23.8)
(0.4)
(1.0)
(0.2)
(0.5)
(1.4)
0.8
Note: Overlapping amounts of volume- and rate-related increases and decreases have been proportionally allocated to both categories.
International Operations
(yen billions)
1999
1998
1997
Categories
Securities . . . . . . . . . . . . . . . . . . . . . . . . .
Call loans . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills purchased. . . . . . . . . . . . . . . . . . . . .
Due from banks . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . .
Negotiable certificates of deposit . . . .
Call money . . . . . . . . . . . . . . . . . . . . . . . .
Bills sold . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper. . . . . . . . . . . . . . . . . .
Borrowed money . . . . . . . . . . . . . . . . . .
Volumerelated
Raterelated
Net
change
Volumerelated
Raterelated
Net
change
Volumerelated
Raterelated
Net
change
¥(123.1)
(39.3)
¥ 78.6
0.7
¥(44.5)
(38.6)
¥(26.4)
6.8
¥(258.1)
8.6
¥(284.5)
15.4
(8.4)
(2.1)
—
(19.3)
(39.0)
(72.2)
(11.1)
(0.7)
—
—
13.4
3.4
(1.1)
—
(13.5)
(23.9)
(35.7)
1.9
(0.3)
—
(2.8)
0.1
—
2.9
(248.4)
34.1
1.5
0.1
—
0.6
(1.1)
—
(10.7)
(272.3)
(1.5)
3.4
(0.2)
—
¥51.0
25.5
—
8.3
(2.1)
—
(12.3)
55.6
12.5
5.8
(2.3)
—
¥ 1.5
(20.6)
—
5.2
(0.9)
—
(27.1)
(14.4)
(34.7)
(0.9)
(1.1)
—
¥ 52.6
4.9
—
13.5
(2.9)
—
(39.4)
41.3
(22.2)
4.9
(3.4)
—
(5.5)
(4.8)
(1.5)
(1.7)
—
(26.0)
(120.4)
(57.1)
(11.8)
(0.8)
—
—
4.6
(6.9)
(0.4)
—
6.7
81.5
(15.0)
0.7
0.2
—
—
8.8
1.9
(1.2)
0.8
0.7
Total
(yen billions)
1999
1998
1997
Categories
Securities . . . . . . . . . . . . . . . . . . . . . . . . .
Call loans . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills purchased. . . . . . . . . . . . . . . . . . . . .
Due from banks . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . .
Deposits . . . . . . . . . . . . . . . . . . . . . . . . . .
Negotiable certificates of deposit . . . .
Call money . . . . . . . . . . . . . . . . . . . . . . . .
Bills sold . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper. . . . . . . . . . . . . . . . . .
Borrowed money . . . . . . . . . . . . . . . . . .
Volumerelated
Raterelated
Net
change
Volume- Raterelated related
Net
change
Volumerelated
¥(39.6)
(13.1)
¥ (3.6)
(29.7)
¥(43.2)
(42.8)
¥(29.2)
7.0
¥(358.4)
(7.8)
¥(387.7)
(0.7)
0.3
(1.7)
0.5
(23.3)
(38.2)
(13.9)
(1.0)
(0.7)
(0.5)
0.4
(10.5)
(25.4)
(0.5)
(0.1)
4.3
(6.9)
(69.3)
(10.4)
0.8
(0.4)
—
19.4
(25.1)
(2.2)
0.5
(19.1)
(45.1)
(83.2)
(11.4)
0.1
(0.9)
0.4
8.9
1.3
(3.4)
0
(20.4)
(39.2)
(6.8)
1.2
(5.4)
(0.8)
(15.8)
2.0
0
8.2
(329.7)
(6.5)
4.7
2.2
0.5
(14.5)
(1.4)
0.1
(12.2)
(368.9)
(13.3)
5.9
(3.2)
(0.3)
¥29.0
16.9
0.1
7.1
(3.8)
(0.3)
(1.8)
22.3
6.7
2.6
(1.0)
(1.1)
4.4
(3.6)
0.8
7.1
Raterelated
Net
change
¥ (82.6) ¥(53.6)
(98.3)
(81.4)
0.3
0.4
(17.4)
(10.3)
(0.2)
(4.0)
(0.2)
(0.5)
(36.8)
(38.6)
(58.3)
(36.0)
(100.8)
(94.2)
(5.2)
(2.6)
(11.7)
(12.7)
(1.5)
(2.6)
(13.4)
(6.2)
Fees and Commissions
(yen billions)
Domestic operations
Category
Fees and commissions (income). . . . . . . . . . . .
Deposits and loans . . . . . . . . . . . . . . . . . . . . .
Remittances and transfers. . . . . . . . . . . . . . .
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proxy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Safe deposits . . . . . . . . . . . . . . . . . . . . . . . . . .
Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fees and commissions (expenses) . . . . . . . . . .
Remittances and transfers. . . . . . . . . . . . . . .
Total
1999
1998
1997
1999
1998
1997
1999
1998
1997
¥46.3
5.6
24.0
5.3
1.8
1.4
0.8
9.3
4.2
¥46.0
5.8
23.9
4.8
2.2
1.4
0.7
9.6
4.3
¥45.5
5.4
23.5
5.3
2.4
1.5
0.9
9.0
4.2
¥12.0
1.9
5.7
—
0
—
3.3
8.3
1.4
¥14.1
2.6
6.4
—
0.2
—
3.9
8.0
1.6
¥14.3
2.6
6.4
—
0.2
—
4.0
6.9
1.7
¥58.3
7.5
29.7
5.3
1.9
1.4
4.1
17.6
5.6
¥60.1
8.3
30.3
4.8
2.3
1.4
4.6
17.7
5.9
¥59.7
8.1
30.0
5.3
2.6
1.5
4.9
15.9
5.8
Trading Income
(yen billions)
Domestic operations
Categories
Trading income . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from trading securities . . . . . . . . . .
Income from securitiesrelated transactions . . . . . . . . . . . . . . . . . .
Income from trading-related financial
derivatives transactions. . . . . . . . . . . . . . .
Other trading income . . . . . . . . . . . . . . . . . . .
Trading expenses. . . . . . . . . . . . . . . . . . . . . . . . .
Expenses from trading securities. . . . . . . . .
Expenses from securitiesrelated transactions . . . . . . . . . . . . . . . . . .
Expenses from trading-related financial . .
derivatives transactions. . . . . . . . . . . . . . .
Other trading expenses . . . . . . . . . . . . . . . . .
1999
1998
¥3.6
0.8
1997
1999
1998
¥0.8
—
¥10.7
—
¥9.2
0
¥12.2
0.8
¥9.3
—
0.9
—
1.1
—
2.0
—
—
1.9
2.1
—
—
0.8
1.8
0.5
9.6
—
0
0
9.2
—
1.3
—
7.5
1.9
—
—
8.4
0.8
2.3
0.5
—
0.5
—
1.3
—
1.8
2.1
—
0.8
—
—
—
—
—
—
—
—
—
Note: Figures represent net income or expense in each of the corresponding categories.
1997
Total
1999
1998
1997
Net Other Operating Income
(yen billions)
Category
1999
1998
1997
1996
1995
Domestic operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profits on trading account securities. . . . . . . . . . . . . . . . . . . . . . . . . . .
Bond related profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profits on foreign exchange transactions . . . . . . . . . . . . . . . . . . . . . . .
Bond related profit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥22
—
22
0
31
14
17
—
¥53
¥56
—
56
0
27
11
16
—
¥83
¥30
1
29
0
13
12
2
—
¥44
¥61
2
60
0
14
10
4
—
¥76
¥ 8
3
6
0
22
15
7
—
¥30
1999
1998
1997
1996
1995
¥ 92.5
2.6
3.1
19.9
15.7
23.4
0.7
3.9
2.9
1.5
4.5
2.9
14.9
56.3
¥244.8
¥ 99.3
2.9
3.1
18.7
15.3
22.8
0.6
3.6
3.1
1.8
4.6
3.5
16.3
57.8
¥253.4
¥100.2
3.1
2.9
19.0
18.2
23.0
1.0
4.8
3.0
1.9
4.9
4.0
15.0
56.8
¥257.7
¥ 97.5
2.9
2.9
19.4
18.0
22.0
1.0
4.5
3.1
1.7
4.7
4.0
15.7
47.0
¥244.5
¥ 98.4
3.4
2.9
18.0
18.1
19.8
1.0
4.4
3.0
1.8
4.5
3.8
13.9
44.4
¥237.7
General and Administrative Expenses
(yen billions)
Salaries and allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retirement allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfer to reserve for retirement allowance . . . . . . . . . . . . . . . . . . . . . .
Social contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Leases on buildings and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repair expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General supplies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lighting and heating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Travel expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Telephone, fax and others. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Advertising expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profitability Ratios
(%)
Pre-tax return on assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pre-tax return on equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Return on equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1999
1998
1997
1996
1995
—
—
—
—
—
—
0.01
0.73
0.14
5.80
0.13
5.29
—
—
—
—
0.10
2.93
0.07
2.07
Notes:
1. Pre-tax return on assets = (Income before income taxes and others/Average total assets-excluding customers' liabilities for acceptances and guarantees) × 100
Return on assets = (Net income/Average total assets) × 100
2. Pre-tax return on equity = (Income before income taxes and others/Average total stockholders’ equity) × 100
Return on equity = (Net income/Average total stockholders’ equity) × 100
3. Figures are not presented for the fiscal years ended March 1996 and March 1999 because losses before income taxes and others and net losses
were recorded for those years.
4. Pre-tax return on assets and equity are not presented for the fiscal year ended March 1998 because a loss before income taxes and others was
recorded for that year.
Interest Rate and Margin Information
(%)
1999
1998
1997
1996
1995
Domestic operations
Return on earning assets . . . . . . . . . . . . . . .
Cost of funds. . . . . . . . . . . . . . . . . . . . . . . . . .
Gross interest margin . . . . . . . . . . . . . . . . . .
2.18
1.94
0.23
2.20
2.00
0.20
2.68
2.44
0.24
3.20
2.78
0.41
3.71
3.41
0.30
Cost of funds. . . . . . . . . . . . . . . . . . . . . . . . . .
7.67
7.96
(0.29)
6.40
6.50
(0.09)
10.08
10.04
0.04
10.06
10.23
(0.17)
8.59
8.83
(0.24)
Total
Cost of funds. . . . . . . . . . . . . . . . . . . . . . . . . .
3.32
3.25
0.07
3.33
3.25
0.08
4.62
4.47
0.14
4.90
4.65
0.25
4.76
4.57
0.18
SUMMARY OF OPERATIONS
(Non-Consolidated Basis)
Deposits
Balance of Deposits by Category
As of March 31
Category
(yen billions, %)
1999
1998
Domestic operations
Demand deposits . . . . . . . . . . . . . . . . . . . . .
Interest-bearing deposits . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . .
Fixed-rate time deposits . . . . . . . . . . . . . .
Market-linked time deposits. . . . . . . . . . . . . .
Other deposits . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certificates of deposit . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 5,991 (37.8)
5,646 (35.6)
9,586 (60.4)
9,568 (60.3)
14 (0.1)
287 (1.8)
15,864 (100.0)
2,260
18,125
¥ 5,474
5,124
9,780
9,763
11
266
15,520
1,734
17,254
Demand deposits . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . .
Fixed-rate time deposits . . . . . . . . . . . . .
Market-linked time deposits. . . . . . . . . . . . .
Other deposits . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
39 (1.5)
15 (0.6)
1,566 (59.9)
—
—
1,011 (38.6)
2,616 (100.0)
30
2,646
¥20,771
42 (1.0)
11 (0.3)
2,682 (61.8)
—
—
1,613 (37.2)
4,337 (100.0)
253
4,590
¥21,844
(35.3)
(33.0)
(63.0)
(62.9)
(0.1)
(1.7)
(100.0)
1997
¥ 5,059
4,680
9,553
9,535
10
296
14,908
2,150
17,059
(33.9)
(31.4)
(64.1)
(64.0)
(0.1)
(2.0)
(100.0)
49 (0.9)
9 (0.2)
3,368 (64.3)
—
—
1,820 (34.8)
5,237 (100.0)
254
5,491
¥22,550
1996
¥ 4,860
4,332
9,692
9,599
11
173
14,725
1,907
16,632
1995
(33.0)
(29.4)
(65.8)
(65.2)
(0.1)
(1.2)
(100.0)
¥ 4,243 (27.8)
3,808 (25.0)
10,757 (70.5)
9,722 (63.7)
10 (0.1)
255 (1.7)
15,255 (100.0)
1,608
16,864
30 (0.5)
7 (0.1)
3,946 (71.6)
—
—
1,534 (27.9)
5,509 (100.0)
193
5,701
¥22,334
17 (0.3)
3 (0.1)
3,501 (68.6)
—
—
1,587 (31.1)
5,106 (100.0)
101
5,207
¥22,071
Note: Figures in parentheses represent percentage of total.
Average Balance
Category
Domestic operations
Demand deposits . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . .
Other deposits . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demand deposits . . . . . . . . . . . . . . . . . . . . .
Time deposits . . . . . . . . . . . . . . . . . . . . . . . .
Other deposits . . . . . . . . . . . . . . . . . . . . . . .
Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(yen billions, %)
1999
¥ 5,273 (34.6)
4,531 (29.7)
9,858 (64.6)
9,841 (64.5)
13 (0.1)
125 (0.8)
15,256 (100.0)
2,419
17,675
1998
¥ 4,834
4,077
9,929
9,911
11
120
14,883
2,321
17,204
(32.5)
(27.4)
(66.7)
(66.6)
(0.1)
(0.8)
(100.0)
1997
¥ 4,394
3,666
9,956
9,929
11
129
14,479
2,245
16,724
(30.3)
(25.3)
(68.8)
(68.6)
(0.1)
(0.9)
(100.0)
1996
¥ 3,904
3,208
10,413
10,136
11
119
14,435
2,126
16,561
1995
(27.1)
(22.2)
(72.1)
(70.2)
(0.1)
(0.8)
(100.0)
¥ 3,652 (25.3)
2,929 (20.3)
10,683 (73.9)
9,835 (68.1)
9 (0.1)
111 (0.8)
14,445 (100.0)
1,855
16,300
18 (0.4)
4 (0.1)
3,141 (65.8)
—
—
1,616 (33.8)
4,776 (100.0)
118
4,893
¥21,193
35 (1.0)
11 (0.3)
2,256 (63.1)
46 (0.9)
11 (0.2)
3,241 (65.8)
38 (0.7)
10 (0.2)
4,085 (70.6)
27 (0.4)
7 (0.1)
3,965 (72.3)
1,285 (35.9)
3,575 (100.0)
103
3,678
¥21,353
1,636 (33.3)
4,923 (100.0)
280
5,203
¥22,407
1,658 (28.7)
5,781 (100.0)
249
6,030
¥22,754
1,492 (27.2)
5,484 (100.0)
151
5,635
¥22,196
Notes:
1. Demand deposits = Current deposits + Ordinary deposits + Installment savings deposits + Deposits at notice
2. Time deposits = Time deposits + Installment time deposits
Fixed-rate time deposits are time deposits with interest rates set at a fixed level throughout the term of the deposit.
Market-linked time deposits are time deposits with interest rates that fluctuate with changes in market rates during the term of the deposit.
3. The average balance of foreign-currency-denominated transactions of domestic branches, included in international operations, is calculated
using the monthly current method (in which the telegraphic transfer figure at the end of the previous month is applied to non-exchange transactions for the applicable month).
4. Figures in parentheses represent percentage of total.
Deposits per Employee
(yen billions)
1999
1998
1997
1996
1995
Domestic branches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥2.01
Overseas branches. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.65
¥1.87
3.02
¥1.81
4.07
¥1.79
4.41
¥1.70
4.46
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥1.98
¥1.96
¥1.99
¥1.97
¥1.89
Notes:
1. Deposits include certificates of deposit.
2. The number of employees is the average number of employees during the fiscal year. Head office employees are included in employees of
domestic branches.
Deposits by Depositor Type
As of March 31
(yen billions, %)
1999
1998
1997
1996
1995
Corporations . . . . . . . . . . . . . . . . . . .
Individuals. . . . . . . . . . . . . . . . . . . . . .
Others . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 6,326 (38.1)
8,874 (53.5)
1,386 (8.4)
¥ 5,998 (37.1)
8,705 (53.9)
1,453 (9.0)
¥ 5,986 (38.0)
8,164 (51.9)
1,596 (10.1)
¥ 6,315 (41.1)
7,745 (50.4)
1,303 (8.5)
¥ 6,745 (42.6)
7,367 (46.5)
1,736 (10.9)
Total
¥16,585 (100.0)
¥16,156 (100.0)
¥15,746 (100.0)
¥ 15,362 (100.0)
¥15,849 (100.0)
.........................
Notes:
1. The balance of deposits shown above is for domestic branches and does not include certificates of deposit, deposits of overseas branches and
transactions in Tokyo special offshore accounts (IBF).
2. Figures in parentheses represent percentage of total.
Time Deposits Classified by Residual Maturity
(yen billions)
3 months
or less
More than 3
months up to
6 months
More than 6
months up to
1 year
More than
1 year up to
2 years
More than
2 years up to
3 years
More than
3 years
Total
Time deposits . . . . . . . . . . . . . . . . . . . . . . . .
¥5,562
¥1,815
¥2,093
¥884
¥556
¥242
¥11,152
Fixed-rate time deposits . . . . . . .
Market-linked time deposits . . . .
4,352
8
1,517
6
2,061
—
875
—
546
—
217
—
9,568
14
(yen billions)
3 months
or less
Time deposits . . . . . . . . . . . . . . . . . . . . . . . .
Fixed-rate time deposits . . . . . . .
Market-linked time deposits . . . .
¥6,253
4,524
6
More than 3
months up to
6 months
¥2,045
1,493
5
More than 6
months up to
1 year
¥2,060
2,042
—
More than
1 year up to
2 years
¥673
648
—
More than
2 years up to
3 years
¥795
786
—
More than
3 years
¥635
270
—
Total
¥12,461
9,763
11
Note: Deposit balances shown in this chart do not include installment time deposits.
Loans
Loans by Category
As of March 31
(yen billions)
1999
Domestic
operations
1998
1997
1996
1995
Loans on notes . . . . . . . . . . . . . . . . . . . . . .
Loans on deeds . . . . . . . . . . . . . . . . . . . . . .
Overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills discounted . . . . . . . . . . . . . . . . . . . . .
¥ 3,383
9,148
2,942
390
¥ 3,323
9,320
3,561
513
¥ 3,357
9,147
3,555
509
¥ 3,347
8,890
3,659
586
¥ 3,518
8,735
4,090
597
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loans on notes . . . . . . . . . . . . . . . . . . . . . .
Loans on deeds . . . . . . . . . . . . . . . . . . . . . .
Overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills discounted . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,863
426
2,335
44
9
2,814
16,717
626
2,902
63
2
3,593
16,569
639
3,134
79
1
3,853
16,482
646
2,661
62
1
3,370
16,941
571
2,121
56
0
2,749
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥18,677
¥20,310
¥20,422
¥19,852
¥19,690
International
operations
Average Balance
(yen billions)
1999
Domestic
operations
International
operations
1998
1997
1996
1995
Loans on notes . . . . . . . . . . . . . . . . . . . . . .
Loans on deeds . . . . . . . . . . . . . . . . . . . . . .
Overdrafts. . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills discounted . . . . . . . . . . . . . . . . . . . . . .
¥ 3,659
9,375
3,636
442
¥ 3,479
9,126
3,653
491
¥ 3,521
8,935
3,670
499
¥ 3,525
8,748
3,815
537
¥ 3,521
8,778
3,942
595
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17,112
16,749
16,626
16,625
16,836
Loans on notes . . . . . . . . . . . . . . . . . . . . . .
Loans on deeds . . . . . . . . . . . . . . . . . . . . . .
Overdrafts. . . . . . . . . . . . . . . . . . . . . . . . . . .
Bills discounted . . . . . . . . . . . . . . . . . . . . . .
516
2,578
55
2
680
3,305
75
1
710
3,104
82
1
622
2,615
64
1
601
1,902
48
0
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,152
4,060
3,897
3,302
2,551
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥20,263
¥20,809
¥20,523
¥19,927
¥19,387
Note: The average balance of foreign-currency-denominated transactions of domestic branches, included in International operations, is calculated
using the monthly current method (in which the telegraphic transfer figure at the end of the previous month is applied to non-exchange
transactions for the applicable month).
Loans per Employee
(yen billions)
1999
1998
1997
1996
1995
Domestic branches. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Overseas branches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1.68
2.90
¥1.67
3.53
¥1.63
3.82
¥1.62
3.46
¥1.59
2.90
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1.78
¥1.82
¥1.80
¥1.75
¥1.67
Note: The number of employees is based on the same standard used in calculating deposits per employee.
Deposit-to-Loan Ratio
Domestic operations
Total
(%)
1999
1998
1997
1996
1995
Year-end . . . . . . . . . . . . . . . . . .
Average for the year . . . . . . . .
Year-end . . . . . . . . . . . . . . . . . .
87.52
96.81
106.32
85.69
96.88
97.35
78.29
78.03
97.13
99.41
70.15
64.62
99.09
100.38
59.10
58.59
100.45
103.29
52.79
52.13
Year-end . . . . . . . . . . . . . . . . . .
89.91
94.89
92.97
92.86
90.56
90.19
88.88
89.77
89.21
91.47
Note: Deposits include certificates of deposit.
Loan Composition by Collateral
As of March 31
(yen billions)
1999
1998
¥
1997
¥
1996
¥
1995
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Merchandise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
341
282
1
2,734
116
¥ 3,474
321
296
1
2,956
168
¥ 3,742
381
338
3
3,163
153
¥ 4,037
¥
451
370
3
3,467
133
¥ 4,424
¥
425
420
3
3,835
97
¥ 4,780
Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7,558
7,645
7,697
8,870
7,657
8,728
6,973
8,456
6,594
8,316
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥18,677
¥20,310
¥20,422
¥19,852
¥19,690
Customers’ Liabilities for Acceptances and Guarantees Composition by Collateral
As of March 31
(yen billions)
Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Merchandise. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1999
1998
1997
1996
1995
¥
¥
¥
¥
¥
¥
8
2
0
42
13
65
18
3
0
83
16
¥ 120
22
11
—
93
20
¥ 146
25
11
0
93
45
¥ 174
26
27
—
105
18
¥ 176
Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
280
1,260
311
1,462
336
1,458
316
1,204
351
1,114
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥1,605
¥1,893
¥1,940
¥1,695
¥1,641
Loans by Purpose of Funds
As of March 31
(yen billions, %)
1999
1998
1997
1996
1995
Funds for working capital . . . . . . . .
¥13,320 (71.3)
¥14,855 (73.1)
¥15,039 (73.6)
¥14,647 (73.8)
¥14,755 (74.9)
Funds for capital investments . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,356 (28.7)
¥18,677 (100.0)
5,455 (26.9)
¥20,310 (100.0)
5,383 (26.4)
¥20,422 (100.0)
5,206 (26.2)
¥19,852 (100.0)
4,935 (25.1)
¥19,690 (100.0)
Note: Figures in parentheses represent percentage of total.
Loan Composition by Industry
As of March 31
(yen billions)
1999
Domestic: (excluding IBF)
Manufacturing . . . . . . . .
Agriculture . . . . . . . . . . .
Forestry. . . . . . . . . . . . . .
Fisheries . . . . . . . . . . . . .
Mining . . . . . . . . . . . . . . .
Construction . . . . . . . . .
Utilities . . . . . . . . . . . . . .
Transportation/
communications . . . .
Wholesale/retail. . . . . . .
Financial services. . . . . .
Real estate . . . . . . . . . . .
Services . . . . . . . . . . . . . .
National government . .
Local governments . . . .
Others . . . . . . . . . . . . . . .
Overseas: (including IBF)
Public sector . . . . . . . . .
Financial institutions . . .
Commerce/industry. . . .
Others . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . .
1998
1997
1996
1995
Loans
outstanding
(Percent
of total)
Loans
outstanding
(Percent
of total)
Loans
outstanding
(Percent
of total)
Loans
outstanding
(Percent
of total)
Loans
outstanding
(Percent
of total)
¥ 2,419
25
2
6
13
936
107
(14.96)
(0.15)
(0.01)
(0.04)
(0.08)
(5.79)
(0.66)
¥ 2,547
26
2
6
21
978
83
(14.87)
(0.15)
(0.01)
(0.04)
(0.12)
(5.71)
(0.49)
¥ 2,539
28
2
7
17
917
34
(14.88)
(0.16)
(0.01)
(0.04)
(0.10)
(5.37)
(0.20)
¥ 2,696
34
2
12
21
818
83
(15.81)
(0.20)
(0.01)
(0.07)
(0.12)
(4.80)
(0.49)
¥ 2,863
37
2
11
19
865
3,123
(16.34)
(0.21)
(0.01)
(0.06)
(0.11)
(4.93)
(17.83)
525
2,684
1,429
2,099
2,350
197
262
3,118
¥16,171
(3.25)
(16.60)
(8.84)
(12.98)
(14.53)
(1.22)
(1.62)
(19.28)
(100.0)
533
2,885
1,583
2,412
2,800
—
195
3,057
¥17,127
(3.11)
(16.84)
(9.24)
(14.08)
(16.35)
(—)
(1.14)
(17.85)
(100.0)
508
2,798
1,719
2,323
2,933
—
189
3,049
¥17,063
(2.98)
(16.40)
(10.08)
(13.61)
(17.19)
(—)
(1.11)
(17.87)
(100.0)
584
2,815
1,627
1,858
3,198
—
218
3,086
¥17,051
(3.42)
(16.51)
(9.54)
(10.90)
(18.75)
(—)
(1.28)
(18.10)
(100.0)
1,765
1,839
542
144
3,264
—
149
2,897
¥17,519
(10.07)
(10.50)
(3.09)
(0.82)
(18.63)
(—)
(0.85)
(16.54)
(100.0)
¥
(3.10)
(12.94)
(72.64)
(11.32)
(100.0)
¥
(3.11)
(16.05)
(70.15)
(10.69)
(100.0)
¥
(3.66)
(14.82)
(69.88)
(11.64)
(100.0)
¥
(5.17)
(14.50)
(67.73)
(12.60)
(100.0)
¥
(6.20)
(24.53)
(51.79)
(17.48)
(100.0)
78
324
1,820
284
2,506
¥18,677
99
511
2,233
340
3,183
¥20,310
123
498
2,347
391
3,359
¥20,422
145
406
1,897
353
2,801
¥19,852
135
533
1,125
380
2,172
¥19,690
Loans and Bills Discounted Classified by Residual Maturity
(yen billions)
1 year
or less
Loans and Bills Discounted. . . . . . . . .
Market-linked interest rate . . . . . .
Fixed interest rate . . . . . . . . . . . . . .
¥7,041
—
—
More than
1 year
through
3 years
More than
3 years
through
5 years
¥3,093
2,010
1,083
More than
5 years
through
7 years
¥1,836
1,146
690
¥851
564
287
More than
7 years
¥2,916
1,759
1,157
No
designated
term
¥2,941
2,941
—
Total
¥18,677
—
—
(yen billions)
1 year
or less
Loans and Bills Discounted. . . . . . . . .
Market-linked interest rate . . . . . .
Fixed interest rate . . . . . . . . . . . . . .
¥7,871
—
—
More than
1 year
through
3 years
More than
3 years
through
5 years
¥3,238
2,043
1,196
More than
5 years
through
7 years
¥1,791
1,160
632
¥831
574
257
More than
7 years
¥3,016
2,011
1,005
No
designated
term
¥3,562
3,562
—
Total
¥20,310
—
—
Note: Loans and bills discounted with a remaining term of one year or less are not divided into market-linked or fixed interest rate categories.
Loans to Medium- and Small-Sized Companies and Percentage of Total
As of March 31
(yen billions)
1999
Loans to medium- and small-sized companies . . . . . . . . . . .
Percentage of total loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥10,566
65.3%
1998
¥11,502
67.1%
1997
¥11,955
70.0%
1996
¥11,851
69.5%
1995
¥11,780
67.2%
Notes
1. Loan balances shown in this chart do not include loans of overseas branches and transactions in Tokyo special offshore accounts (IBF).
2. Figures under medium- and small-sized companies are those companies capitalized at less than ¥100 million (¥30 million for wholesalers and ¥10
million for retailers, restaurants and service companies) or those companies with 300 or fewer employees (100 or fewer for wholesalers and 50 or
fewer for retailers, restaurants and service companies), and individuals.
Consumer Loans
As of March 31
Housing loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other loans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(yen billions)
1999
1998
1997
1996
1995
¥2,979
557
¥3,536
¥2,795
638
¥3,433
¥2,699
713
¥3,412
¥2,568
775
¥3,343
¥2,346
838
¥3,185
Balance of Specific Overseas Loans
(yen millions)
Country
Balance
Percentage of total
Indonesia
Others
¥48,696
677
98.6
1.4
Total
¥49,373
100
Country
Balance
Percentage of total
¥ 31
22
112
36
25
13.5
9.6
49.1
15.7
10.9
Algeria
Argentina
Brazil
Bulgaria
Poland
Others
Total
3
1.2
¥228
100
Note: Specific overseas loans (loans for which provisions are made to the specific reserve for overseas loan losses) are stated as loans to individual
countries which account for at least 5% of the total.
Reserve for Possible Loan Losses
(yen billions)
1999
Balance at
beginning
of term
General reserve . . . . . . . . . . . . . . . . .
Specific loan-loss provision. . . . . . .
(formerly reserve for
specific loan loss)
incl. loans to nonresidents. . . . . .
Specific reserve for
overseas loan losses . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
1998
Increase
during
term
Decrease
during
term
Balance at
end of
term
¥ 79.4 ¥ 92.1
(2.0)
713.0
163.9
(1.3)
¥ 79.4
¥ 92.1
713.0
163.9
2.6
19.7
2.6
0
8.2
(0)
¥792.4 ¥264.1
(3.3)
0
8.2
¥792.4
¥264.1
19.7
(1.2)
Balance at
beginning
of term
1997
Increase
during
term
Decrease
during
term
Balance at
end of
term
¥ 62.9 ¥ 81.4
(0.3)
655.2
355.4
(1.1)
¥ 62.9
¥ 81.4
296.4
714.3
0.2
6.5
20.9
5.4
0
(0.2)
¥723.5 ¥436.8
(1.6)
5.4
0
¥364.6
¥795.7
27.2
(1.1)
Balance at
beginning
of term
Increase
during
term
Decrease
during
term
Balance at
end of
term
¥ 63.4 ¥ 62.5
(2.6)
694.2
88.6
(1.9)
¥ 63.4
¥ 62.5
128.6
654.2
6.4
3.0
26.1
5.1
5.2
(0.5)
¥762.8 ¥156.3
(5.0)
5.1
5.2
¥197.2
¥721.9
22.7
(1.9)
Note: Figures for the beginning of term in parentheses are foreign exchange translation differentials.
Loan Charge-Offs
Loan charge-offs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(yen billions)
1999
1998
1997
1996
1995
¥211.7
¥19.6
¥8.1
¥32.3
¥4.6
Sales of Loans to the Cooperative Credit Purchasing Company (CCPC)
As of March 31
(yen billions)
1999
Balance of sales of loans to the CCPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserve for possible losses on sale of loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserve ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥117.4
68.4
58.3%
Securities
Securities Holdings
As of March 31
(yen billions, %)
1999
Domestic operations
National government bonds . . .
Regional government bonds . . .
Corporate bonds. . . . . . . . . . . . . .
Stocks . . . . . . . . . . . . . . . . . . . . . . .
Other securities. . . . . . . . . . . . . . .
Foreign bonds. . . . . . . . . . . . . .
Foreign stocks. . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds. . . . . . . . . . . . . .
Stocks . . . . . . . . . . . . . . . . . . . . . . .
Foreign bonds. . . . . . . . . . . . . .
Foreign stocks. . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
1998
1997
1996
1995
¥ 781 (19.7)
307 (7.7)
335 (8.4)
2,455 (61.9)
90 (2.3)
—
—
¥1,014 (26.0)
234 (6.0)
159 (4.1)
2,427 (62.4)
58 (1.5)
—
—
¥ 737 (18.8)
331 (8.4)
525 (13.4)
2,276 (58.2)
45 (1.2)
—
—
¥ 531 (14.1)
263 (7.0)
741 (19.7)
2,203 (58.5)
26 (0.7)
—
—
3,969 (100.0)
3,892 (100.0)
3,914 (100.0)
3,763 (100.0)
3,523 (100.0)
—
—
—
—
709 (100.0)
557 (78.6)
152 (21.4)
—
—
—
—
523 (100.0)
341 (65.1)
183 (34.9)
—
—
—
—
844 (100.0)
656 (77.8)
187 (22.2)
—
—
—
—
655 (100.0)
473 (72.3)
182 (27.7)
—
—
—
—
451 (100.0)
279 (61.7)
173 (38.3)
709 (100.0)
¥4,678
523 (100.0)
¥4,416
844 (100.0)
¥4,757
655 (100.0)
¥4,418
¥ 434
420
762
1,883
23
—
—
(12.3)
(11.9)
(21.6)
(53.5)
(0.7)
451 (100.0)
¥3,974
Average Balance
(yen billions, %)
1999
Domestic operations
Corporate bonds. . . . . . . . . . . . . .
Stocks . . . . . . . . . . . . . . . . . . . . . . .
Foreign bonds. . . . . . . . . . . . . .
Foreign stocks. . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . .
Corporate bonds. . . . . . . . . . . . . .
Stocks . . . . . . . . . . . . . . . . . . . . . . .
Foreign bonds. . . . . . . . . . . . . .
Foreign stocks. . . . . . . . . . . . . .
Total. . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . .
1998
1997
1996
¥ 835 (21.5)
270 (7.0)
241 (6.2)
2,458 (63.4)
73 (1.9)
¥ 838 (21.9)
280 (7.3)
306 (8.0)
2,359 (61.6)
47 (1.2)
¥ 623 (16.2)
343 (8.9)
633 (16.5)
2,216 (57.5)
35 (0.9)
3,877 (100.0)
3,830 (100.0)
3,850 (100.0)
3,786 (100.0)
3,594 (100.0)
—
—
—
—
757 (100.0)
576 (76.1)
181 (23.9)
—
—
—
—
789 (100.0)
600 (76.0)
189 (24.0)
—
—
—
—
719 (100.0)
535 (74.4)
184 (25.6)
—
—
—
—
543 (100.0)
364 (67.0)
179 (33.0)
—
—
—
—
462 (100.0)
285 (61.8)
177 (38.2)
757 (100.0)
¥4,634
789 (100.0)
¥4,619
719 (100.0)
¥4,570
¥ 552
476
816
1,916
26
1995
(14.6)
(12.6)
(21.5)
(50.6)
(0.7)
543 (100.0)
¥4,330
¥ 419
396
903
1,831
46
(11.7)
(11.0)
(25.1)
(50.9)
(1.3)
462 (100.0)
¥4,057
Notes:
1. Loaned securities are included in the relevant categories above.
2. The average balance of foreign-currency-denominated transactions at domestic branches included in international operations is calculated
using the current month method (the telegraphic transfer rate at the end of the prior month is applied to non-exchange transactions).
3. Figures in parentheses represent percentage of totals.
Trading Volume and Average Balance of Trading Account Securities
(yen billions)
1999
1998
1997
1996
1995
Trading volume
Trading account national government bonds . . . . . . . . . ¥25,880.4
Trading account regional government bonds . . . . . . . . .
1.0
Trading account government-guaranteed bonds. . . . . .
0.3
¥37,371.7
0.2
—
¥45,575.4
35.4
17.4
¥22,726.1
0.5
—
¥46,644.5
22.4
25.7
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥25,881.7
¥37,372.0
¥45,628.2
¥22,726.6
¥46,692.6
21.7
0.9
0.3
36.4
0.6
0.4
32.4
0.7
0.5
156.8
1.0
0.7
Average balance
Trading account national government bonds . . . . . . . . .
Trading account regional government bonds . . . . . . . . .
Trading account government-guaranteed bonds. . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥
7.4
1.0
0.3
8.6
¥
22.9
¥
37.4
¥
33.6
¥
158.6
Ratio of Securities to Deposits
(%)
1999
1998
1997
1996
1995
Domestic operations
Year-end . . . . . . . . . . . . . . . . .
Average for the year . . . . . . .
21.89
21.93
22.55
22.26
22.94
23.02
22.62
22.86
20.88
22.05
Year-end . . . . . . . . . . . . . . . . .
26.79
20.57
11.40
15.16
15.36
11.93
11.48
9.64
8.67
9.44
Total
Year-end . . . . . . . . . . . . . . . . .
22.52
21.70
20.21
20.61
21.09
20.08
19.78
19.50
18.00
19.14
1996
1995
Note: Deposits include negotiable certificates of deposit.
Secured Bonds Entrusted
As of March 31
(yen billions)
1999
1998
1997
Sole or representative trustee . . . . . . . . . . . . . . . . . . . . . . . . .
Co-trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥150
108
¥168
165
¥220
196
¥267
263
¥292
280
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥258
¥333
¥417
¥531
¥571
Government Bond Underwriting
As of March 31
(yen billions)
1999
1998
¥118
1997
¥115
1996
1995
National government bonds . . . . . . . . . . . . . . . . . . . . . . . . . .
Regional government bonds/
government-guaranteed bonds . . . . . . . . . . . . . . . . . . . . .
¥151
¥128
¥156
96
97
95
112
75
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥247
¥215
¥209
¥240
¥231
Over-the-Counter Sales of Government Bonds Including National Government Bonds and Investment Trusts
(yen billions)
1999
1998
¥38
1997
¥32
1996
1995
National government bonds . . . . . . . . . . . . . . . . . . . . . . . . . .
Regional government bonds/
government-guaranteed bonds . . . . . . . . . . . . . . . . . . . . .
¥26
¥34
¥35
1
0
4
4
2
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥27
¥38
¥35
¥38
¥37
Investment trusts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 8
¥—
¥—
¥—
¥—
Note: Over-the-counter sales of investment trusts began on December 1, 1998.
Domestic Commercial Paper Issues Arranged
Issue amount arranged . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(yen billions)
1999
1998
1997
1996
1995
¥2,456
¥1,986
¥1,963
¥2,996
¥2,034
Balance of Securities Classified by Residual Maturity
(yen billions)
1 year
or less
National government bonds . . . . . .
Regional government bonds . . . . . .
Corporate bonds . . . . . . . . . . . . . . . .
Stocks . . . . . . . . . . . . . . . . . . . . . . . . .
Other securities . . . . . . . . . . . . . . . . .
Foreign bonds . . . . . . . . . . . . . . . .
Foreign stocks . . . . . . . . . . . . . . . .
Loaned securities . . . . . . . . . . . . . . . .
More than
1 year
through
3 years
More than
3 years
through
5 years
More than
5 years
through
7 years
More than
7 years
through
10 years
More than
10 years
¥ 3
19
22
¥65
48
97
¥ 28
39
121
¥244
57
40
¥407
142
55
¥ 35
1
—
80
63
38
8
245
235
23
23
84
59
103
103
—
0
0
—
—
—
No
designated
term
¥
—
—
—
2,455
227
65
152
—
Total
¥ 781
307
335
2,455
799
557
152
0
(yen billions)
1 year
or less
National government bonds . . . . . .
Regional government bonds . . . . . .
Corporate bonds . . . . . . . . . . . . . . . .
Stocks . . . . . . . . . . . . . . . . . . . . . . . . .
Other securities . . . . . . . . . . . . . . . . .
Foreign bonds . . . . . . . . . . . . . . . .
Foreign stocks . . . . . . . . . . . . . . . .
Loaned securities . . . . . . . . . . . . . . . .
More than
1 year
through
3 years
More than
3 years
through
5 years
More than
5 years
through
7 years
More than
7 years
through
10 years
More than
10 years
¥194
8
32
¥30
52
46
¥175
50
35
¥88
33
27
¥525
89
10
¥
—
1
8
68
65
43
23
84
68
12
10
24
14
151
149
—
—
1
—
—
—
No
designated
term
¥
—
—
—
2,427
200
10
183
—
Total
¥1,013
234
159
2,427
582
341
183
1
Note: Treasury stock is included in “Stocks.”
Remittances and Transfers
Volume of Domestic Remittances and Transfers
(thousands of transactions, yen billions)
1999
Remittance drafts Sent (nationwide)
Received (nationwide)
Collection of bills
Sent (nationwide)
Received (nationwide)
1998
1997
1996
1995
Transactions . . . . . . .
Amount . . . . . . . . . . .
Amount . . . . . . . . . . .
106,839
¥283,000
93,547
¥283,876
106,488
¥279,342
92,623
¥276,718
104,787
¥275,157
90,851
¥272,871
99,988
¥288,515
84,087
¥284,716
95,935
¥277,545
80,399
¥273,836
Amount . . . . . . . . . . .
Amount . . . . . . . . . . .
1,115
¥1,567
363
¥ 672
1,209
¥1,870
373
¥ 682
1,311
¥1,943
392
¥ 755
1,276
¥1,884
383
¥ 604
1,355
¥2,103
408
¥ 729
Volume of Foreign Exchange Transactions
(US$ billions)
1999
Remittances overseas
Bills of exchange sold . . . . . .
Bills of exchange bought . . .
Remittances from overseas Bills of exchange for
payment . . . . . . . . . . . . . . . .
Bills of exchange for
1998
1997
1996
1995
$177
9
$259
13
$264
16
$258
17
$178
17
226
275
265
259
208
collection . . . . . . . . . . . . . . .
7
8
9
10
13
Total. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$419
$555
$555
$543
$415
Note: Includes transactions at overseas branches.
CAPITAL AND STOCK
Composition of Capital Increase
For the years ended March 31
(yen billions)
1999
Capital increase. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conversion of convertible bonds . . . . . . . . . . . . . . . . . . . .
Issue of preference shares . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1998
¥ 61.0
—
300.0
¥361.0
¥723.0
1997
¥
—
—
—
¥
—
¥362.0
1996
¥
—
—
50.0
¥ 50.0
¥362.0
1995
¥
—
0
—
¥
0
¥312.0
¥
—
—
—
¥
—
¥312.0
Stock Issuances
Registered or Bearer and
Par Value or Non-Par Value
Stock
Issued
Number of shares issued
Type
Registered par value
shares
(par value ¥50)
Common stock*
2,251,676,394
Nagoya Stock Exchange (1st Section)
Tokyo Stock Exchange (1st Section)
Osaka Securities Exchange (1st Section)
London Stock Exchange
Paris Stock Exchange
Swiss Stock Exchange
50,000,000
First preference shares (type A)
Registered non-par
value shares
Exchange and Section
Second preference shares (type B)
150,000,000
Third preference shares (type B)
150,000,000
Total
2,601,676,394
*Note: Carries voting rights.
Per Share and Other Information
For the years ended March 31
1999
Cash dividends per share (yen) . . . . . Common
stocks
1998
¥
Common
stocks (New)
7.00
68.75
Second
preference
shares
0.06
Third
preference
shares
0.06
First
preference
shares
¥
8.50
Common
stocks
1996
¥
8.50
4.25
34.375
First
preference
shares
68.75
First
preference
shares
6.50
¥
8.50
Common
stocks
—
Common
stocks
—
First
preference
shares
First
preference
shares
68.75
4.25
764
824
965
Net assets per share (yen) . . . . . . . . .
404.65
334.36
336.66
769.68
47.76
(93.21)
—
1.10
4.25
4.25
34.375
Net income (loss) per share (yen) . . .
(Figures in parentheses indicate
net loss per share)
Year-end market price per share (yen)
Dividend payout ratio (%). . . . . . . . . .
¥
1995
2.75
First
preference
shares
Interim cash dividends per . . . . . . . . Common
share (yen)
stocks
Common
stocks
1997
17.79
(170.63)
1,330
324.52
—
10.34
1,060
503.67
82.18
Notes:
1. Net income (loss) per share is calculated using net income (loss) after deducting cash dividends for preference shares from net income (loss),
divided by the average number of common stocks for the fiscal year.
2. Net assets per share is calculated by deducting (number of preference shares at fiscal year end x issue price) from net asset amount at fiscal year
end, divided by the number of common stocks at fiscal year (excluding treasury stock).
3. The dividend payout ratio is calculated using the cash dividends for common stocks for the fiscal year, divided by net income, after deducting
cash dividends for preference shares.
Issuance of Preference Shares
Shareholder
First preference shares (type A)
Second preference shares (type B)
Third preference shares (type B)
Shares held (thousands)
TB Finance (Cayman) Limited
Resolution and Collection Bank, Limited*
Resolution and Collection Bank, Limited*
Percentage held of
total shares issued
50,000
150,000
150,000
100.00%
100.00
100.00
* Note: Renamed Resolution and Collection Corporation on April 1,1999, with the merger of Resolution and Collection Bank, Limited and Housing
Loan Administration Corporation
Common Stockholders by Type
Stock Information (1 unit = 1,000 shares)
Number of stockholders . . .
Shares held (units) . . . . . . . . .
Percentage of total . . . . . . . .
National and
regional
government
bodies
Financial
institutions
Securities
companies
Other
corporate
entities
Foreign
shareholders
(includes
individuals)
1
200
0.01
212
641,059
28.60
45
32,986
1.47
5,543
1,296,599
57.85
249 (9)
95,140 (38)
4.24 (0.00)
Individuals
and other
Total
35,696
175,528
7.83
41,746
2,241,512
100.00
Shares totaling
less than
one unit
10,164,394
Notes:
1. Out of a total of 13,259 shares of treasury stock 13 units are included in “Individuals and other” and 259 shares are included in “Shares totaling
less than one unit.” Also, 13,259 shares of treasury stock are registered in the names of the shareholders, but the actual number of shares held
at the end of the fiscal year was 11,259 shares.
2. The columns “Other corporate entities” and “Shares totaling less than one unit” include 70 units and 800 shares, respectively, of shares held in a
custodian’s name.
Common Stockholders by Amount Held
Shares
Over
1,000 units
Number of stockholders . . . . . . . . . . . . .
Percentage of total . . . . . . . . . . . . . . . . . .
Shares held (units) . . . . . . . . . . . . . . . . . . .
Percentage of total . . . . . . . . . . . . . . . . . .
334
0.80
1,755,689
78.33
Over
Over
Over
500 Units 100 units 50 units
157
0.38
106,682
4.76
Over
10 units
Over
5 units
Over
1 unit
670
609
6,426
1.61
1.46
15.39
141,560 40,795 109,853
6.31
1.82
4.90
6,481
15.52
40,515
1.81
27,069
41,746
64.84
100.00
46,418 2,241,512
2.07
100.00
Total
Shares totaling
less than
one unit
10,164,394
Note: The columns “Over 50 units” and “Shares totaling less than one unit” include 70 units and 800 shares, respectively, of shares held in a
custodian’s name.
Major Shareholders (Shares in Thousands)
Shareholder
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
Toyota Motor Corporation ..........................................................................................
The Chiyoda Mutual Life Insurance Co. ....................................................................
Nippon Life Insurance Co. ...........................................................................................
Toyoshima Co., Ltd. ......................................................................................................
The Dai-ichi Mutual Life Insurance Co. ......................................................................
Meiji Life Insurance Co. ................................................................................................
Asahi Mutual Life Insurance Co. ..................................................................................
Sumitomo Life Insurance Co. ......................................................................................
The Asahi Bank, Ltd. ......................................................................................................
Chiyoda Fire & Marine Insurance ...............................................................................
The Nippon Credit Bank, Ltd. ......................................................................................
Kondo Bosekijo K.K. .......................................................................................................
The Sumitomo Trust and Banking Company, Ltd. ...................................................
Toho Gas Co., Ltd. .........................................................................................................
Toshiba Corporation ....................................................................................................
Mitsubishi Trust & Banking Corporation ..................................................................
Suzuki Motor Corporation ..........................................................................................
Chubu Electric Power Co., Inc. ....................................................................................
Nagoya Railroad Co., Ltd. .............................................................................................
Okaya Co., Ltd. ................................................................................................................
Number of Shares
% of Total Shares
114,765
80,010
67,765
55,866
42,610
39,507
35,479
27,189
26,074
25,716
22,624
21,922
20,433
18,737
17,968
17,537
17,194
16,956
16,813
15,931
5.09
3.55
3.00
2.48
1.89
1.75
1.57
1.20
1.15
1.14
1.00
0.97
0.90
0.83
0.79
0.77
0.76
0.75
0.74
0.70
Consolidated Subsidiaries and Affiliates
Overseas
Principal Business
Date
Established
Tokai Bank of California
Tokai California Finance Corporation
Commercial Banking
Leasing
6/74
8/86
US$116.3m
US$0.05m
100.0
(100.0)
Tokai Bank Canada
Commercial Banking
1/87
Can$56.6m
100.0
Tokai Finance (Curaçao) N.V.
Commercial Finance
1/91
US$0.2m
100.0
Tokai Preferred Capital Holdings, Inc.
Tokai Preferred Capital Company L.L.C.
Investment
Commercial Finance
3/98
3/98
US$125m
US$125m
100.0
(100.0)
Commercial Banking
1/76
D.Gl.80.5m
100.0
Banking/Securities
4/84
SFr57.4m
100.0
Company Name
Percent of
Investment*
Capital
Americas
Europe & Middle East
Tokai Bank Nederland N.V.
Tokai Bank (Switzerland) Ltd.
Tokai Bank (Deutschland) GmbH
Banking/Securities
5/90
DM50.0m
Tokai Bank Europe plc
TBE Leasing Limited
Tokai Trust Europe Limited
Tokai Derivative Products Ltd.
Banking/Securities
Leasing
Trustee Services
Derivatives
1/92
12/92
10/96
1/95
Stg£139.5m
Stg£100
Stg£0.25m
Stg£1.0m
Securities
Leasing
Leasing
1/92
12/92
6/96
Stg£105.9m
Stg£100
Stg£100
80.26
(99.0)
(99.0)
Leasing
12/91
US$0.02m
99.99
Tokai Capital Markets Limited
TCM Leasing Limited
TCM Leasing II Limited
Tokai Airfinance Europe Limited
100.0
100.0
(99.0)
(100.0)
TBE:19.9
TCM:80.1
(
)
Asia & Oceania
Tokai Asia Limited
Securities
1/77
US$57.6m
Commercial Finance
5/85
A$70.0m
100.0
Operations in
Financial Futures Market
9/85
S$3.3m
100.0
P.T. Tokai Lippo Bank
Commercial Banking
12/89
Rp136,977m
65.0
Bangkok First Tokai Company Ltd.
Commercial Finance
4/73
B150.0m
45.0
Hanil Leasing Co. Ltd.
Leasing
10/84
W101,500m
17.3
Global Business Bank
Commercial Banking
1/97
P2,000.0m
30.0
Leasing
4/88
US$5.0m
25.0
Investment Advisor
3/90
Stg£0.15m
9.0
Leasing
4/85
Rp10,000m
30.0
Tokai Australia Finance Corporation Ltd.
Tokai Financial Futures (Singapore) Pte., Ltd.
100.0
Affiliates
Industrial & Commercial International
Leasing Co., Ltd.
Tokai Morgan Grenfell International
Funds Management Ltd.
P.T. Bapindo Loka Sentra Leasing
*Figures in parentheses represent investments of subsidiaries.
Domestic
Company Name
Principal Business
Date
Established
Capital*
Percent of
Investment**
Tokai International Securities Co., Ltd.
Securities
1/95
22,222
90.0
The Tokai Trust and Banking Co., Ltd.
Trust
8/95
10,000
100.0
Cash Handling and Delivery/
ATM Maintenance
6/95
10
100.0
100.0
Tokai Area Maintenance Co., Ltd.
Tokai Career Service Co., Ltd.
Personnel Services
7/86
20
Real Estate
10/94
200
100.0
Tokai Sogo Service Co., Ltd.
General Services for the
Bank’s Employees
12/60
10
100.0
Tokai Business Aid Co., Ltd.
Balance Inquiry and Cash
Transfer Services
4/96
50
100.0
Cash Handling and
Mailing Services
8/80
10
100.0
Building Maintenance and
Management
10/87
20
100.0
Dealing Operation Back
Office (Securities, Forex,
Money, Derivatives)
3/97
40
100.0
Appraisals of
Real Estate Collateral
4/89
20
100.0
Consumer & Housing Loan
Operations
3/97
10
100.0
Mortgage Securities
10/83
1,050
5.0
Credit Card
4/68
1,399
5.0
Tokai Real Estate Management Co., Ltd.
Tokai Business Service Co., Ltd.
Tokai Facility Service Co., Ltd.
Tokai Market Operation Service Co., Ltd.***
Tokai Mortgage Service Co., Ltd.***
Tokai Loan Operations Service Co., Ltd.***
Central Mortgage Acceptance Corporation
Million Card Service Co., Ltd.
The Million Credit Co., Ltd.
The Central Capital Ltd.
Bangkok Central Capital Co., Ltd.
Loan Guarantee
2/71
200
5.0
Investment/Loan
1/74
860
5.0
(58.5)
Investment/Loan
3/90
B35.0m
Central Systems Co., Ltd.
Information Processing
7/70
1,310
System Support Co., Ltd.
Information Processing/
2/71
30
(100.0)
Computer Office
Management/Software
Development/Data Entry
12/72
30
(100.0)
Data Entry Agency/
Staff Dispatch
7/79
10
(100.0)
Clerical Consignment/
Staff Dispatch
8/87
80
(100.0)
Cargo Shipping
3/77
10
(100.0)
Software Development/
Hardware Sales
2/82
170
(61.4)
5.0
Computer Staff Dispatch
CST Co., Ltd.
CS Seven Co., Ltd.
CSA Co., Ltd.
CS Delivery Co., Ltd.
Central Information Systems Co., Ltd.
Tokai Research & Consulting Inc.
Consulting/Research
9/79
200
5.0
Tokai Asset Management Co., Ltd.
Investment Trust
Management and
Investment Advisory
9/94
1,200
9.4
Tokai Maruman Finance Co., Ltd.
Investment/Loan
6/83
300
5.0
Shintosho Development Co., Ltd.
Real Estate Broking
8/70
200
4.0
Daiatami Kokusai Golf Co., Ltd.
Golf Course Management
5/61
120
3.4
Asahi Country Club Co., Ltd.
Golf Course Management
4/73
330
(44.5)
Mutual Housing Loan
10/13
80
5.0
Real Estate Leasing
and Management
3/78
60
1.8
Real Estate
1/84
200
Nippon Mutual Housing Loan Co., Ltd.
Miyuki Building Co., Ltd.
Nishiki Jisho Co., Ltd.
*Millions of yen
**Figures in parentheses represent investments of subsidiaries.
***As of April 1, 1999, these three companies were merged into Tokai Business Service Co., Ltd.
(100.0)
TOP MANAGEMENT
BOARD OF DIRECTORS
Chairman of the Board & CEO
Managing Directors
Satoru Nishigaki
Member of the Board of Directors
Takeshi Sugihara
President
Yoshio Hirata
Hideo Ogasawara
Yoshihiko Takeda
Toshihide Kubo
Deputy President
Director
Shoji Tokumitsu
Kazuo Takeuchi
Senior Managing Directors
Senior Corporate Auditor
Fumio Suzuki
Masaru Hashizume
Kazuyoshi Tanaka
Corporate Auditors
Nobuyuki Ito
Kazuteru Mizuno
Masami Iwasaki
Seitaro Taniguchi
Senior Managing Directors
Directors
Arata Murakami
Hirohisa Aoki
Ikuo Suzuki
Kazuo Sassa
Yoshihiro Ohga
Yoshihiro Shiraishi
Kenji Sueyasu
Toshihiko Takamoto
Hiroshi Tarao
Managing Directors
Masato Nakamura
Tatsuo Tsuchikawa
Noriaki Akatsuka
Seiichi Ohno
Kenji Ishibe
Masato Nanahara
Hiroyuki Itakura
Tetsuo Komori
Susumu Kato
Yoshiki Hama
Takeo Kaneko
Yoshiyuki Hamaya
Noboru Taniuchi
Yasuhiko Asai
Kazuo Yoshihara
As of June 30, 1999
ORGANIZATION CHART
Chubu Banking Div.
Public Institutions Div., Head Office
Credit Div. – I
Secretariat
Chubu Area Branches
Career Service Dept.
Personnel Div.
Chubu Retail
Banking Company
Chubu Retail
Banking Promotion Div.
Chubu Area Specialty Boutiques
Training & Education Dept.
Tokyo Banking Div.
Overseas Audit Dept.
Public Institutions Div., Tokyo
Audit Div.
Branch Administration Center
Credit Div. – II
Kanto Area Branches
Credit Review Div.
Kansai Banking Div.
General Meeting
of Shareholders
Credit Div. – III
Business Planning Div.
Kansai Area Branches
Corporate Business Planning Dept.
Financial Institutions Div.
Wholesale Banking Planning Dept.
Head Office
Credit Div. – IV
Network Planning Div.
Tokyo Main Office
Board of
Directors
Board of Corporate
Auditors
Osaka Branch
Investment Banking
Planning Div.
Investment
Banking Company
Retail Banking Planning Div.
Corporate Auditors
Americas Dept.
International Credit Div.
Overseas Branches and Offices
Business Development Div.
Treasury & Securities Div.
Securities Investment Dept.
Global Trading Div.
International Trading Dept.
Corporate
Auditors’ Dept.
Premises & General Affairs Div.
Derivative & Structured
Products Div.
Property Management Dept.
Executive
Committee
International Finance Div.
Economic Research Div.
(Business Support Unit)
Customer Relations Dept.
Affiliated Business Div.
Customer Service Div.
Tokyo Customer Relations Dept.
Capital Markets Div.
Osaka Customer Relations Dept.
Business Information Development Div.
Public Relations Div.
Social Contribution Dept.
International Business Promotion Div.
Private Banking Promotion Div.
Consumer Loan Div.
ALM Div.
Treasury Dept.
New Airport Project Dept.
(Operations Administration Unit)
Risk Management Div.
Nagoya Operations Center
Tokyo Operations Center
Corporate Planning Div.
Osaka Operations Center
Accounting & Comptroller’s Dept.
Regional Operations Center
Consumer & Housing Loan Operations Center
Operations Administration
Planning Div.
Operations Planning Div.
Tokyo Consumer & Housing Loan Operations Center
Nagoya International Operations Center
Tokyo International Operations Center
Compliance Div.
Legal Dept.
Osaka International Operations Center
Markets Operations Dept.
Credit Planning Div.
Corporate Research Dept.
Systems Div.
Systems Administration Dept.
(Loan Promoting Unit)
Credit Div.
Credit Management Div.
Credit Management Center
INTERNATIONAL DIRECTORY
Senior Managing Director, President of Investment Banking Company ................................................... Arata Murakami
Managing Director, Member of the Board of Directors ......................................................................................Yoshio Hirata
(responsible for investment banking planning, international credit, treasury & securities)
Director............................................................................................................................................................................. Kenji Ishibe
(responsible for global trading, international finance, derivative & structured products)
INVESTMENT BANKING PLANNING DIVISION
PLANNING GROUP
BUSINESS ADMINISTRATION GROUP
IT PLANNING GROUP
ACCOUNTING GROUP
AMERICAS DEPT.
General Manager .......................................... Yasuyuki Kato
Deputy General Manager ........................ Nobuyuki Hidaka
Planning
Deputy General Manager .......................... Satoshi Todo
Assistant General Manager ........................ Hiroshi Goto
Business Administration
Deputy General Manager .......................... Akira Komori
Assistant General Manager............ Toshiyuki Miyawaki
IT Planning
Assistant General Manager ........... Yasuhiko Morinaga
Accounting
Assistant General Manager ................... Kunihiko Nakai
Americas Dept. (Located in New York)
Head of Americas ................................... Shinichiro Mizuno
Deputy General Manager and
Chief of Americas Dept. ........................... Yasushi Goto
General Counsel and
Deputy General Manager ................ George T. Bujarski
Assistant General Manager............................. Hidetoshi Cho
INTERNATIONAL CREDIT DIVISION
CREDIT PLANNING GROUP
AMERICAS & EUROPE GROUP
ASIA GROUP
PROJECT & LOAN ADMINISTRATION GROUP
General Manager ...................................... Reijiro Yamazaki
Credit Planning
Assistant General Manager ................... Masaaki Kotani
Senior Manager (New York) .......... Toshihiro Yabuuchi
Americas & Europe
Deputy General Manager ................... Tsutomu Tezuka
Senior Manager ................................. Yoshiaki Shimizu
Asia
Assistant General Manager ............. Shingo Kawamura
Project & Loan Administration
Assistant General Manager ............... Hidekazu Tanaka
Senior Manager ..................................... Toshiya Ohashi
TREASURY & SECURITIES DIVISION
QUANTITATIVE PRODUCTS GROUP
INTERNATIONAL TREASURY GROUP
SECURITIES INVESTMENT DEPT.
General Manager ......................................... Akira Enomoto
Quantitative Products
Manager .......................................... Yusuke Uchiyama
International Treasury
Assistant General Manager ..................... Masaki Okada
Securities Investment Dept.
Chief of Securities Investment Dept. &
Deputy General Manager .................... Shuzo Imanishi
Assistant General Manager .................... Keiji Yamaoka
GLOBAL TRADING DIVISION
PLANNING GROUP
CUSTOMER GROUP
BOND TRADING GROUP
INTERNATIONAL TRADING DEPT.
General Manager ..................................... Kunihide Fukuda
Planning
Manager ..................................................... Ryohei Aiga
Customer
Manager .......................................... Hiroshi Yoshinami
Bond Trading
Manager ........................................... Masao Yamashiro
International Trading Dept.
Chief of International Trading Dept. &
Deputy General Manager............. Hitoshi Shimamura
Assistant General Manager ................ Kazuyori Nagata
DERIVATIVE & STRUCTURED PRODUCTS DIVISION
PLANNING GROUP
DERIVATIVES MARKETING GROUP
RISK ADVISORY GROUP
ASSET SECURITIZATION GROUP
CHUBU MARKETING GROUP
General Manager ......................................... Yukiyoshi Higo
Planning
Deputy General Manager .......... Katsunobu Katayama
Derivatives Marketing
Assistant General Manager ........... Masayoshi Kitahara
Risk Advisory
Assistant General Manager .................. Nobuaki Mizuno
Asset Securitization
Assistant General Manager .................... Masataka Sato
Chubu Marketing
Manager ........................................... Katsuyuki Tsuzuki
INTERNATIONAL FINANCE DIVISION
PROJECT & STRUCTURED FINANCE GROUP
STRUCTURED TRADE FINANCE GROUP
CORRESPONDING BANKING GROUP
General Manager ................................. Takeshi Ogasawara
Project & Structured Finance
Global Head ................................. Peter Higginbotham
Deputy Head ................................................. William Ho
Deputy General Manager .......................... Hiroyuki Kita
Assistant General Manager ............ Katsuhiko Inayoshi
Assistant General Manager ................... Toshihiko Goto
Structured Trade Finance
Global Head .................................................. Sean Aston
Deputy Head ............................................. David Barnes
Assistant General Manager .............. Takatoshi Haruna
Corresponding Banking
Manager .................................................... Enko Sueoka
CAPITAL MARKETS DIVISION
PLANNING GROUP
BUSINESS PROMOTION GROUP
EQUITY PORTFOLIO GROUP
SECURITIES OPERATIONS GROUP
General Manager ................................... Toshiaki Morinaga
Deputy General Manager ....................... Masazumi Misumi
Assistant General Manager ............................ Toshio Horide
Assistant General Manager .......................... Makoto Morita
BUSINESS INFORMATION DEVELOPMENT DIVISION
BUSINESS PROMOTION ADVISORY
REGIONAL PROJECT DEVELOPMENT ADVISORY
MERGERS & ACQUISITIONS — CROSS BORDER
MERGERS & ACQUISITIONS — DOMESTIC
General Manager .................................... Tomohiro Kawase
Business Promotion Advisory and
Regional Project Development Advisory
Deputy General Manager ................. Tsunehiro Tanaka
Mergers & Acquisitions — Cross Border
and Domestic
Senior Manager .................................... Nobuyuki Nozu
INTERNATIONAL BUSINESS PROMOTION DIVISION
INTERNATIONAL BUSINESS PROMOTION GROUP
CHINA DEPT., ASIA DEPT., FOREIGN TRADE &
INVESTMENT INFORMATION DEPT.
General Manager ............................................ Noboru Kano
International Business Promotion
Assistant General Manager (Tokyo) ......... Kazuhiko Hirao
Assistant General Manager (Nagoya) ......... Toshiaki Kato
Senior Manager (Osaka) ................... Hideki Yamamoto
China Dept.
Assistant General Manager
and Chief of China Dept. ........... Tetsuya Tsunekawa
Asia Dept.
Senior Manager and
Chief of Asia Dept. ...................... Fumikazu Ishikawa
Foreign Trade & Investment Information Dept.
Senior Manager ........................... Michitaka Watanabe
OPERATIONS PLANNING DIVISION
INTERNATIONAL OPERATIONS PLANNING GROUP
FOREIGN OPERATIONS PLANNING GROUP
General Manager ........................................... Shozo Somiya
International Operations Planning
Deputy General Manager ...................... Mikio Ishihama
Assistant General Manager .................... Masahiro Kato
Foreign Operations Planning
Assistant General Manager ............. Toshikazu Nakano
OPERATIONS ADMINISTRATION PLANNING DIVISION
MARKETS OPERATIONS DEPT.
CORRESPONDENTS’ ACCOUNTS SECTION
SECURITIES OPERATIONS GROUP
General Manager ............................................... Koji Tsuzuki
Markets Operations Dept.
Deputy General Manager and
Chief of Markets Operations Dept. .............. Yuji Fujita
Correspondents' Accounts
Assistant General Manager ............. Yoshio Matsumoto
Securities Operations
Assistant General Manager (Tokyo) ..... Takashi Miyoshi
Assistant General Manager (Nagoya) ....... Takashi Zaitu
NEW AIRPORT PROJECT DEPARTMENT
General Manager .................................. Hisamitsu Mizutani
Assistant General Manager .......................... Kiyoto Kusano
As of June 30, 1999
OVERSEAS NETWORK
AMERICAS
Overseas Offices
New York Branch
Park Avenue Plaza
55 East 52nd Street
New York, NY 10055, U.S.A.
HEAD OF AMERICAS,
GENERAL MANAGER:
Shinichiro Mizuno
Telex: 422857 TOKAI
Tel:
1-212-339-1200
Fax: 1-212-754-2153
Los Angeles Agency
300 South Grand Avenue
One California Plaza, 7th Floor
Los Angeles, CA 90071, U.S.A.
GENERAL MANAGER and AGENT:
Sadao Akiyama
Telex: 215245 TOKAIBANK LSA
Tel:
1-213-972-8400
Fax: 1-213-689-1700
Chicago Branch
181 West Madison Street, Suite 3600
Chicago, IL 60602, U.S.A.
GENERAL MANAGER:
Masanori Nakagawa
Telex: 206269 TOKAI CGO
Tel:
1-312-853-3400
Fax: 1-312-977-0003
Cayman Branch
P.O. Box 707, Grand Cayman
British West Indies
HEAD OF AMERICAS,
GENERAL MANAGER:
Shinichiro Mizuno
Kentucky Representative Office
Turfway Ridge Office Park II,
Suite 210, 7310 Turfway Road
Florence, KY 41042, U.S.A.
CHIEF REPRESENTATIVE:
Shuji Tanaka
Tel:
1-606-746-1800
Fax: 1-606-746-1799
Mexico Representative Office
Paseo de la Reforma No. 199
Despacho 503, Col. Cuauhtemoc,
06500 Mexico D.F., Mexico
Michihiko Nakamura
Telex: 1777596 TOKBME
Tel:
52-5-566-2966
Fax: 52-5-592-6538
Pasadena Office
200 E. Colorado Boulevard
Pasadena, CA 91105
Tel:
1-626-577-4515
São Paulo Representative Office
Rua Libero Badaro 377
Sala 910, São Paulo 01009, Brazil
Michihiko Nakamura
Telex: 1135366 TASL BR
Tel:
55-11-3106-9071
Fax: 55-11-3106-3896
San Diego Office
4350 La Jolla Village Drive,
Suite 100 San Diego, CA 92122
Tel: 1-619-404-0155
Subsidiaries
Tokai Bank of California
Main Office:
300 South Grand Avenue
One California Plaza, 6th Floor
Los Angeles, CA 90071, U.S.A.
PRESIDENT:
Sadao Akiyama
Tel:
1-213-972-0200
Fax: 1-213-972-0204
San Francisco Office
505 Montgomery Street
San Francisco, CA 94111, U.S.A.
Telex: 340633 TOKAISFO
Tel:
1-415-399-0660
Sacramento Office
2500 Venture Oaks Way
Suite 175
Sacramento, CA 95833
Tel:
1-916-567-7076
Little Tokyo Office
333 South Alameda Street
Los Angeles, CA 90013
Tel:
1-213-625-2628
Garfield Office
333 S. Garfield Avenue
Alhambra, CA 91803
Tel:
1-626-570-6240
Huntington Beach Office
19006 Brookhurst Street
Huntington Beach, CA 92646
Tel:
1-714-963-5651
Orange County Office
18831 Von Karman
Irvine, CA 92612
Tel:
1-714-752-1133
Shigeyoshi Sato
Telex: 340633 TOKAISFO
Tel:
1-415-399-0660
Playa Del Rey Office
8000 West Manchester Avenue
Playa del Rey, CA 90293
Tel:
1-310-823-9281
Temple City Office
9934 East Las Tunas Drive
Temple City, CA 91780
Tel: 1-626-286-6550
South Bay Office
19191 South Vermont Avenue
Torrance, CA 90502
Tel: 1-310-768-8895
Ontario Office
800 N. Haven Avenue
Ontario, CA 91764
Tel: 1-909-989-8311
Encino Office
16027 Ventura Boulevard
Encino, CA 61436
Tel:
1-818-995-7814
Fresno Office
7110 North Fresno Street
Suite 330 Fresno, CA 93720
Tel:
1-559-447-6525
Tokai Bank Canada
Box 84, Suite 2401
Sun Life Centre, 150 King St. West
Toronto, Ontario M5H 1J9, Canada
PRESIDENT:
Ryuji Kurihara
Telex: 3771546 TOKAIBANK TOR
Tel:
1-416-597-2210
Fax: 1-416-591-7415
Tokai Finance (Curaçao) N.V.
14 John B Gorsiraweg
P.O. Box 3889, Curaçao
Netherlands Antilles
Tokai Preferred Capital
Holdings Inc.
One Rodney Square
10th Floor, Tenth and King Streets
Wilmington, New Castle County
Delaware 19801, U.S.A.
EUROPE AND MIDDLE EAST
Overseas Offices
London Branch
One Exchange Square
London EC2A 2EH, U.K.
REGIONAL MANAGER FOR EUROPE,
MIDDLE EAST & AFRICA,
GENERAL MANAGER:
Tsuneo Matsuhisa
Telex: 887375/6 TOKAIL G
Tel:
44-171-496-8000
44-20-7496-8000
Fax: 44-171-638-1144/1155
44-20-7638-1144/1155
Frankfurt Branch
Bockenheimer Landstrasse 51-53
60325 Frankfurt/Main
Germany
GENERAL MANAGERS:
Naoyoshi Shibamoto
Rudolf Bachfeld
Tel:
49-69-1700950
Fax: 49-69-17009522
Düsseldorf Branch
Immermannstrasse 13
40210 Düsseldorf
Germany
GENERAL MANAGER:
Naoyoshi Shibamoto
Telex: 8586948 TKAD D
Tel:
49-211-164760
Fax: 49-211-162282
Birmingham Representative Office
63 Temple Row
Birmingham, B2 5LS, U.K.
Hiroshi Kawai
Telex: 335989 TOKBIR
Tel:
44-121-616-2161
Fax: 44-121-616-2712
Brussels Representative Office
Avenue Louise 283
1050 Brussels, Belgium
Naoya Hisada
Telex: 20446 TOKAIB
Tel:
32-2-646-7940
Fax: 32-2-646-8690
Tehran Representative Office
4th Floor of a Building Registered
under No. 6933/6985
No. 34/1 Haghani Expressway,
Tehran, The Islamic Republic of Iran
Kaoru Masuda
Telex: 215254 TOKB 1R
Tel:
98-21-879-1105
Fax: 98-21-879-1106
Bahrain Representative Office
Room No. 302, 3F, Part 1
Manama Centre, Government Road
P.O. Box 2217
Manama, State of Bahrain
Hiroshi Tamano
Telex: 7361 TOKBAH BN
Tel:
973-224121
Fax: 973-224436
Subsidiaries
Tokai Bank Nederland N.V.
Keizersgracht 452, 1016 GD
Amsterdam, The Netherlands
MANAGING DIRECTOR:
Yukitoshi Harayama
Telex: 12606, 11664, 15626
TOKAINL
Tel:
31-20-6271616
Fax: 31-20-6241872
Tokai Bank Europe plc
One Exchange Square
London EC2A 2JL, U.K.
PRESIDENT & CEO:
Motohisa Fujino
Telex: 8812649 TOKEUR G
Tel:
44-171-638-6030
Fax: 44-171-588-5875
Tokai Bank (Switzerland) Ltd.
Nüschelerstrasse 30
8001 Zurich, Switzerland
PRESIDENT:
Fusayoshi Nakanishi
Telex: 822244 TOK CH
Tel:
41-1-212-6464
Fax: 41-1-212-6550
Tokai Bank (Deutschland) GmbH
Bockenheimer Landstrasse 51-53
60325 Frankfurt/Main
Germany
PRESIDENT:
Yuji Sugiura
Telex: 4175983 TOK D
Tel:
49-69-1700950
Fax: 49-69-17009522
Tokai Airfinance Europe Limited
P.O. Box 301
Queen’s House
Don Road
St. Helier, Jersey
British Isles
One Exchange Square
London EC2A 2JL, U.K.
PRESIDENT & CEO:
Motohisa Fujino
Telex: 8812649 TOKEUR G
Tel:
44-171-638-6030
Fax: 44-171-588-5875
Hong Kong Branch
(See Asia & Oceania subsidiaries)
Affiliates
Tokai Morgan Grenfell
International Funds
Management Limited
20 Finsbury Circus
London EC2M 1NB, U.K.
MANAGING DIRECTOR:
Christopher M. Phillips
Telex: 920286 MGAM G
Tel:
44-171-256-7500
Fax: 44-171-826-0552
ASIA AND OCEANIA
Overseas Offices
Singapore Branch
80 Raffles Place, #16-01
UOB Plaza 1, Singapore 048624
Singapore
DIRECTOR, HEAD OF SOUTH EAST ASIA,
GENERAL MANAGER:
Hirohisa Aoki
Telex: 21848 TOKAIBK RS
26289/26290
(For foreign exchange)
Tel:
65-5358222
Fax: 65-5355972
Hong Kong Branch
25th Alexandra House
16-20 Chater Road
Central, Hong Kong
HEAD OF EAST ASIA,
GENERAL MANAGER:
Koichi Fukamizu
Telex: 85801 TOKBK HX
Tel:
852-25265861
Fax: 852-28684401
Seoul Branch
17th Floor, Kyobo Building 1
Chongro 1-ka, Chongro-ku
Seoul, Republic of Korea
GENERAL MANAGER:
Takashi Yoshida
Telex: 25716 TOKAISL K
Tel:
82-2-739-9810
Fax: 82-2-739-9814
Labuan Branch
Level 7 (D) Main Office Tower
Financial Park Labuan
Jalan Merdeka
Federal Territory of Labuan
Malaysia
GENERAL MANAGER:
Masahiko Yamada
Telex: MA85008 TOKLAB
Tel:
60-87-408025
Fax: 60-87-419193
Kuala Lumpur Marketing Office
18th Floor, Bangunan ArabMalaysian, Letter Box No. 18A
55 Jalan Raja Chulan
50200 Kuala Lumpur, Malaysia
Telex: MA031782 TOK LMO
Tel:
60-3-201-5234
Fax: 60-3-201-5239
Taipei Branch
33F Shin Kong Life Tower
66, Sec. 1, Chung-Hsiao W. Rd.
Taipei, Taiwan
GENERAL MANAGER:
Toshiyuki Sasaki
Telex: 26020 TKAIROCT
Tel:
886-2-2371-8888
Fax: 886-2-2371-8000
Tianjin Branch
Rm. 811, Tianjin International
Building
75 Nanjing Lu, Tianjin
People’s Republic of China
GENERAL MANAGER:
Fumio Ochiai
Telex: 234203 TOKAICN
Tel:
86-22-2330-4852
Fax: 86-22-2330-4660
Shanghai Branch
18th Floor, Nextage Business
Center No. 1111
Pudong South Road
Pudong New District, Shanghai
People’s Republic of China
GENERAL MANAGER:
Toshihiro Ikeda
Telex: 33533 TOKSH A CN
Tel:
86-21-5830-6570
Fax: 86-21-5830-6450
Bangkok International Banking
Facility
25th Floor, C.P. Tower Building
313 Silom Road, Bangrak,
Bangkok, 10500 Thailand
GENERAL MANAGER:
Hitoshi Ozawa
Telex: 82471 TOKAIBK TH
Tel:
66-2-231-0952
Fax: 66-2-231-0955
Beijing Representative Office
Rm. 3202, Jing Guang Centre
Hujialou, Chaoyang District
Beijing, People’s Republic of China
Makoto Sugahara
Telex: 22901 TOKAI CN
Tel:
86-10-6597-3868
Fax: 86-10-6597-3079
Guangzhou Representative Office
Room No. 510
China Hotel Office Tower
Liu Hua Lu
Guangzhou, People’s Republic of
China
Yukiyoshi Morikawa
Telex: 440685 TOKAI CN
Tel:
86-20-8667-7731
86-20-8666-3388 (Ext. 2519)
Fax: 86-20-8667-7720
Mumbai Representative Office
81, Maker Chambers VI
Nariman Point, Mumbai
400021, India
Kazushige Tajima
Tel:
91-22-281-0645
Fax: 91-22-281-0646
Yangon Representative Office
Wizaya Plaza 5th Floor
226, U Wizara Road
Dagon Township, Yangon
Union of Myanmar
Tamiharu Handa
Tel:
95-1-248191
Fax: 95-1-243094
Manila Regional Representative
Office
9th Floor, Metrobank Plaza Building
Sen. Gil. Puyat Avenue
Makati City, Philippines
Hitoshi Matsushita
Telex: 66172 TOKAI PN
Tel:
63-2-818-8616
Fax: 63-2-818-3082
Ho Chi Minh City Representative
Office
Suite E, 9th Floor, OSIC Building No. 8
Nguyen Hue Street, District 1
Ho Chi Minh City
Socialist Republic of Vietnam
Hisayoshi Kikuchi
Tel:
84-8-8242-230
Fax: 84-8-8241-962
Kuala Lumpur Representative
Office
18th Floor
Bangunan Arab-Malaysian
Letter Box No. 18
55 Jalan Raja Chulan
Tsuneo Horita
Tel:
60-3-2380933
Fax: 60-3-2301059
Jakarta Representative Office
Bapindo Plaza Tower II
25th Floor, JI. Jend. Sudirman
Kav 54-55
Jakarta 12190, Indonesia
Koichi Suzuki
Tel:
62-21-5266830
Fax: 62-21-2590141
P.T.Tokai Lippo Bank
Bapindo Plaza Tower II
25th Floor, JI. Jend. Sudirman
Kav 54-55
Jakarta 12190, Indonesia
PRESIDENT:
Hajime Kato
Telex: 60937 TOKAIL IA
Tel:
62-21-5266820
Fax: 62-21-5266840
Subsidiaries
Bangkok First Tokai Company
Limited
C.P. Tower Building 25th Floor
313 Silom Road, Bangrak
Bangkok, 10500 Thailand
MANAGING DIRECTOR:
Hitoshi Ozawa
Telex: 82187 BFTOKAITH
Tel:
66-2-231-0946
Fax: 66-2-231-0955
Tokai Asia Limited
(Incorporated in the Cayman
Islands)
16-20 Chater Road
Central, Hong Kong
MANAGING DIRECTOR and CEO:
Yoshimitsu Yamagata
Telex: 85214 TOKHK HX
Tel:
852-2978-6888
Fax: 852-2840-0069
Tokai Australia Finance
Corporation Limited
19th Level, Colonial Centre
52 Martin Place
Sydney, N.S.W. 2000, Australia
MANAGING DIRECTOR:
Masahiro Nakajima
Telex: 176327 TAFCOL
Tel:
61-2-9231-6599
Fax: 61-2-9221-1775
Tokai Financial Futures
(Singapore) Pte., Ltd.
80 Raffles Place, #16-01
UOB Plaza 1, Singapore 048624
Singapore
DIRECTOR, HEAD OF SOUTH EAST ASIA,
MANAGING DIRECTOR:
Hirohisa Aoki
Telex: 21848 TOKAIBK RS
Tel:
65-5358222
Fax: 65-5325453
Hong Kong Branch
16-20 Chater Road
Central, Hong Kong
GENERAL MANAGER:
Tamaji Ikehata
Tel:
852-25372628
Fax: 852-25372578
Affiliates
Hanil Leasing Company Limited
51 Sogong Dong, Coung-ku
Seoul, Republic of Korea
Telex: 29362 HILEASE
Tel:
82-2-757-4121
Fax: 82-2-757-4845
Industrial & Commercial
International Leasing Co., Ltd.
Room No. 2728, Dongfang Hotel
1 Liu Hua Lu, Guangzhou
The People’s Republic of China
Telex: 441033 ICIL CN
Tel:
86-20-8666-6248
Fax: 86-20-8666-6148
Global Business Bank
Skyland Plaza, Senator Gil Puyat
Avenue Corner Tindalo St.,
Makati City, Philippines
Tel:
63-2-845-0388
Fax: 63-2-845-0393
P.T. Bapindo Loka Sentra
Leasing
Gedung Dana Graha
2nd Floor, Jl. Gondangdia Kecil
12-14, Jakarta 10350, Indonesia
Tel:
62-21-3190-3702
Fax: 62-21-3190-3704
Associates
Asia Financial Holdings, Ltd.
Clarendon House
Church Street
Hamilton HM11, Bermuda
Asia Commercial Bank Ltd.
(owned by Asia Financial
Holdings)
Asia Financial Centre, 120,
Des Voeux Road, Central,
Hong Kong
Telex: 73085 HKACB HX
Tel:
852-2541-9222
Fax: 852-2541-0009
AMMB Holdings Berhad
22nd Floor
Jalan Raja Chulan
P.O. Box 10233
Domestic Operations Centers
Nagoya Operations Center
Central P.O. Box 22, Nagoya
Cable Address: TOKAIBANK NAGOYA
Telex: J59930 TOKAIBKA
Fax: 052-211-0937
Tokyo Operations Center
Central P.O. Box 134, Tokyo
Cable Address: TOKAIBANK TOKYO
Telex: J22277 TOKAIBK
Tel:
03-3456-3318
Osaka Operations Center
Central P.O. Box 435, Osaka
Cable Address: TOKAIBANK OSAKA
Telex: J63355 TOKAIBKA
Fax: 06-226-1462
Arab-Malaysian Merchant Bank
Berhad
(owned by AMMB Holdings
Berhad)
21st-26th Floor
Jalan Raja Chulan
P.O. Box 10233
Telex: MA 31167 & 31169 ABMAL
Tel:
60-3-2382633
Fax: 60-3-2382842
Arab-Malaysian Bank Berhad
(owned by AMMB Holdings
Berhad)
18th Floor, Menara Dion
Jalan Sultan Ismail
Tel:
60-3-2063939
Fax: 60-3-2066270
Bangkok Central Leasing Co., Ltd.
16th Floor, Sethiwan Tower 139
Pan Road, Silom
Bangkok, Thailand
Tel:
66-2-266-6040
Fax: 66-2-237-4492
As of June 30, 1999
CORPORATE DATA
21-24, Nishiki 3-chome, Naka-ku, Nagoya 460-8660, Japan
Telex: J59930 TOKAIBK
Tel: +81-52-211-1111
Contact: +81-3-3242-2111 (Tokyo)
Investment Banking Planning Division
6-1, Otemachi 2-chome, Chiyoda-ku, Tokyo 100-8105, Japan
Cable Address:
TOKAIBANK TOKYO
Tel:
+81-3-3242-2111
Fax:
+81-3-3245-1487
+81-3-3245-1489
Telex:
J29234 TOKAITOK
J22277 TOKAIBK
SWIFT Code:
TKAIJPJT
URL:
http://www.csweb.co.jp/TBK/
Shares Outstanding as of March 31, 1999:
Common Stocks
2,251,676,394
First Preference Shares:
50,000 thousand
Second Preference Shares:
150,000 thousand
Third Preference Shares:
150,000 thousand
Number of Stockholders:*
Common Stocks:
41,746
First Preference Shares:
1
Second Preference Shares:
1
Third Preference Shares:
1
Number of Employees:
Securities Traded:
Transfer Agent and Registrar:
Auditor:
11,094
Tokyo Stock Exchange (8321)
Osaka Securities Exchange (8321)
Nagoya Stock Exchange (8321)
London Stock Exchange (6895341)
Paris Stock Exchange (14184)
Swiss Stock Exchange (765140)
The Chuo Trust & Banking Co., Ltd.
Deloitte Touche Tohmatsu
(by Tohmatsu & Co., the Japanese
member firm of Deloitte Touche
Tohmatsu International)
*Stockholders who hold at least 1,000 shares.
Printed in Japan

The Tokai Bank, Limited

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